The effect of Co doping concentration, (x = 0.025-0.2), in In2-xCoxO3 thin film was investigated by X-rays diffraction (XRD), transmission electron microscopy, X-ray photoelectron spectroscopy (XPS), Ultraviolet visible spectrophotometer (UV-vis) and vibrating sample magnetometer (VSM). All films were prepared by sol-gel technique followed by spin coating process. The XRD and XPS measurements indicate that Co+2 has been successfully substituted in In+3 site. The TEM measurement shows nanostructure morphology of the films. The doping of Co in indium oxide resulted in a decrease in the lattice parameters and grain size while the band gap increased with increasing Co concentration. Further, by comparing VSM and XPS results, the magnetic behaviour of the films were found to be sensitive to Co concentrations, oxygen vacancies and ratio of oxygen defects to Co concentrations. The magnetic behaviour of the prepared films was explained using bound magnetic polaron (BMP) model. (C) 2014 Elsevier Ltd. All rights reserved.