The primary aim of this work was to synthesize and develop room temperature ferromagnetism in un-doped and transition metals (TMs) doped In2O3 nanoparticles and to study the structural, optical and magnetic properties of these samples with the view to understand the origin of intrinsic ferromagnetism. We first optimize the synthesis process for getting our nanoparticles. Subsequent annealing at elevated temperature then yield high quality crystallized samples for further characterization. The latter comprises a detailed and systematic study on the effects of particle size and dopant concentration on the structural, electronic, optical and magnetic properties of the samples. The studied samples were (i) different sizes of In2O3 nanoparticles (5, 15, 24 nm and bulk), (ii) Sn+4 doped In1.96-xFe0.04SnxO3 (x = 0.005, 0.01, 0.015, 0.02 and 0.025), Fe doped In2O3. X-ray diffraction confirms the formation of single phase in all In2O3 nanoparticles and bulk counterpart. The bigger size nanoparticle and bulk were found to be nonmagnetic whereas ferromagnetic ordering with a TC above room temperature is found in the sample having smallest particle size. The optical band gap of these nanoparticles as estimated by UV-Vis optical spectroscopy is found to be increasing with decreasing particle size. The observed correlation between magnetic and XPS lead to the conclusion that the observed size induced ferromagnetism in In2O3 nanoparticles has its origin in increasing number of oxygen vacancies with decreasing particle size. Room temperature resistivity also found to be consistent with the magnetic and optical data i.e., the stabilization of ferromagnetism with decreasing particle size is accompanied with a significant enhancement in conductivity. With co-doping of Sn4+ ions in In1.96-xFe0.04SnxO3 (x ≤ 2.5%) the moment found to vary non-monotonically with increasing x. The XPS of Fe 2p core level indicate the presence of mixed Fe ionic state. In other words, as the Sn concentration increases, Fe +2 begins to appear in dominant Fe+3 state. This result is consistent with the observed strong decrease both in electron concentration and ferromagnetic moment. Thus, the presence of Sn appears play crucial role for stabilizing ferromagnetic order via decreasing the carrier concentration by reducing Fe3+ to Fe2+. All of our results are explained within the framework of defect mediated ferromagnetism in wide band gap semiconductors. In this picture, Fe+ exchange mechanism in pure In2O3 nanoparticles and spin split impurity (defect) band states in Sn4+ doped In1.96-xFe0.04SnxO3 nanoparticles are responsible for monotonic moment along with the formation of spin polarons. The particle nature of the samples may enhance the density of states and leading to a fulfillment of the Stoner criteria. Thus, the key to ferromagnetism in our samples is the presence of the oxygen vacancies. The latter serve as n-type defects and create states within the band gap. The transition metal ions provide the required electrons sin order to fix the position of the Fermi level.