The electronic states of indium oxide are calculated by a molecular orbital method. The conduction band consists mainly of oxygen 2p and indium 5p. The valence band consists of O-2p. When there is an oxygen vacancy in the indium oxide, a localized orbital appears at the indium site near the oxygen vacancy, which forms a vacancy level below the bottom of the conduction band. When there are many oxygen vacancies in the indium oxide, the vacancy level is unlocalized. When Sn atoms are substituted for In atoms, localized molecular orbitals of Sn-5p and O-2p appear at the high-energy part of the conduction band. On the other hand, when Sn atoms are inserted into interstitial positions, vacancy levels appear below the bottom of the conduction band. When there are many oxygen vacancies in both cases, the oxygen vacancy levels appear between the conduction band and the valence band. The complex formed by In, Sn and O forms the doping level.