The effects of N-induced acceptor defects on tuning optical, transport, and magnetic properties of In 2 O 3 films fabricated by magnetron sputtering technique were investigated systematically by X-ray diffraction, X-ray photoelectron spectroscopy, UV−visible absorbance, Hall effect, film resistivity (ρ) versus temperature, magnetoresistance, and magnetic measurements. Detailed structural analyses reveal that N-doped In 2 O 3 films have a cubic bixbyite structure with the substitutional N defect at the O sites of In 2 O 3 lattice. The N-doped In 2 O 3 films display clear room-temperature ferromagnetic behavior and Mott variable range-hopping transport behavior. With increasing N-doping concentration, the saturated magnetization of the films monotonically increases and the conductivity transforms into p-type. Crossover of negative to positive magnetoresistance and a red shift of the optical band gap E g are also observed with N-doping. First-principles calculations show that the localized holes induced by N-doping can mediate the magnetic interaction by short-range N 1 :p-In:d/p-N 2 :p hybridization in N-doped In 2 O 3 system. Therefore, the intrinsic ferromagnetic ordering in N-doped In 2 O 3 films can be attributed to p−p interaction between N 2p orbitals, which causes a large Zeeman-split effect to suppress the carrier's hopping path, leading to formation of positive magnetoresistance.