Erbium-doped indium oxide films were prepared by rf magnetron sputtering. The Er-doped oxide films are conducting (or semiconducting) with a resistivity in the range of 10−3–103 Ω cm, and are optically active, i.e., show a clear room-temperature photoluminescence at 1.54 μm, corresponding to intratransitions in Er3+ ions. Compared with the undoped indium oxide films, the erbium doping was found to have the effect of increasing the resistivity (up to two orders of magnitude) of the films, mainly via a reduction of carrier concentration. Postdeposition annealing in air ambient significantly enhances both the Er3+ luminescence and Hall mobility (up to 60 cm2/V s), and reduces the carrier concentration. Postdeposition annealing in reducing ambient (N2/H2), however, decreases the resistivity dramatically, mainly via an increase of carrier concentration (up to 1020 cm−3), and also enhances the Er3+ luminescence.