Structural, electrical, and magnetic properties of (In0.97-xFexMg0.03)2O3 films with different Fe concentration are investigated. The doped Fe ions replace the In1 sites of In2O3 lattice with the mixed-valence of +2 and +3 states and form FeIn1+2VO complex based on the real-space multiple-scattering simulation. The room temperature ferromagnetic hysteresis loop of Fe/Mg co-doped In2O3 films shows ferromagnetic ordering with coercivity Hc of about 150-300 Oe. Obvious increase of ferromagnetic hysteresis loop and saturation magnetic moment with a maximum value of 8.45 emu/cm3 (x = 0.08) are observed due to the more incorporation of Fe ions. All the films exhibit n-type conductive behavior, which are mainly dominated by Mott variable range hopping with strong localization of carriers. Interestingly, the contribution of positive and negative magnetoresistance (MR) strongly correlates with Fe dopant and temperature. It can conclude that the FeIn1+2VO complex based on bound magnetic polaron model plays a key role for achieving the intrinsic ferromagnetism.