The present work reports structural and magnetic properties of pure In 2O3 bulk samples and nanoparticles. Nanoparticles of different sizes 5, 12, and 22 nm and bulk samples are characterized by X-ray diffraction, X-ray photoemission spectroscopy, and superconducting quantum interference device. Structural analysis has shown that the undertaken materials posses cubic bixbyite structure. The core level spectroscopy of In3d and O1s revealed that indium oxide nanoparticles are non-stoichiometric with O/In composition ratio varies from 1.43 for bulk to 0.81 for 5-nm nanoparticles. This decrease in the O/In ratio indicates that the surface defects (presumably oxygen vacancies) are systemically increased with decreasing particle size. We found that only the lower size nanoparticles (5 and 12 nm) exhibit ferromagnetism, which can be attributed to the uncompensated surface spins. The coercivity and saturated magnetization measured at 305 K are 86 Oe and 0.005 emu cm-3 for sample ION-1, while 81 Oe and 0.001 emu cm-3 for sample ION-2, respectively. The effect of defect concentration on the ferromagnetism could be due to the long-range ferromagnetic ordering via defect-related hybridization at the Fermi level. © Springer Science+Business Media B.V. 2012.