Thin-film transistors (TFTs) with neodymium-substituted indium oxide (InNdO) channel layer were demonstrated. The structural properties of the InNdO films as a function of annealing temperature have been analyzed using X-ray diffraction and transmission electron microscopy. The InNdO thin films showed polycrystalline nature when annealed at 450 °C with a lattice parameter (cubic cell) of 10.255 Å, which is larger than the cubic In2O3 film (10.117 Å). The high-resolution transmission electron microscopy and energy dispersive X-ray spectroscopy showed that no Nd2O3 clusters were found in the InNdO film, implying that Nd was incorporated into the In2O3 lattice. The InNdO TFTs annealed at 450 °C exhibited more excellent electrical properties with a high mobility of 20.4 cm2 V−1 s−1 and better electric bias stability compared to those annealed at 300 °C, which was attributed to the reduction of the scattering centers and/or charge traps due to the decrease of the |Nd3d5/254f4O2p−1⟩ electron configuration.