Detailed theoretical investigations on the structural, electronic and optical properties of p-type conducting In:SnO2 have been conducted by first principle calculations. Analysis on the thermal stability via standard enthalpy of formation calculations shows that In:SnO2 remains stable at very high In concentration, although the lattice constant expands in a distorted rutile structure with the increase of indium content. This can be attributed to the larger ionic radii and the one less 5p electron of In3+. Due to the differences in thermal stabilities of the structures with the same indium concentration, the preferred In3+ distribution is to occupy the Sn sites in different (110) slabs, followed by occupying the location in the same (110) slab with a maximized distance between indium ions. Indium element in SnO2 introduces a band in the low energy region originated from the In 4d orbitals and an acceptor energy level slightly above the Fermi energy. While the large effective mass of the electron holes in the valence band results in the small p-type conductivity of In:SnO2. The tiny changes in the conduction band and band gap lead to the invariability of the optical spectra in the ultraviolet-visible region. On the contrary, the dramatic enhancement of dielectric function. reflectivity and absorption in infrared region can be interpreted by the transition from the occupied states to the empty bands near E-f as well as the exciton effect. These features make In:SnO2 a good candidate for applications such as transparent conducting materials, infrared reflecting materials and gas sensors. (C) 2008 Elsevier B.V. All rights reserved.