Indium oxide (In2O3) nanoparticles exhibit finite-size driven ferromagnetic behavior. Samples having sufficiently small particle size are ferromagnetic whereas samples with larger size show nonmagnetic behavior. X-ray diffraction confirms polycrystalline cubic bixbyite structure of In2O3. X-ray photoemission spectroscopy (XPS) and Photoluminance (PL) spectroscopy identify significant number of oxygen vacancies with effective concentration increasing with decreasing particle size. Magnetic characterizations reveal that the observed ferromagnetism is induces and stabilizes in small particles with significant number of oxygen vacancies. The observed intrinsic ferromagnetic interactions are attributed to the defect density and corresponding finite size effect. (C) 2015 Elsevier B.V. All rights reserved.