Fe/In2O3 magnetic granular films have been prepared by rf sputtering method. The results reveal that the nanometersized Fe particles uniformly dispersed in the amorphous matrix In2O3 for the as-deposited samples. At room temperature, the Fe0.35/(In2O3)0.65 film shows a superparamagnetic behavior. The average diameter of particles (d = 5 nm) estimated from the fitting values of the saturation magnetization of Fe particles MFe and magnetic moment m is fitted well with that observed by TEM. The spectra analyses indicate that the indirect photon transitions of granular Fex/ (In2O3)1-x films substitute for the direct photon transition of In2O3 film in the absorption process. The band gaps of magnetic granular films decrease monotonously with the increase of volume fraction of Fe particles in the magnetic granular films, and the tail width of localized states becomes wider in concentration range of Fe studied.