Diluted magnetically doped CeO2 films is an attractive dilute magnetic oxide which would facilitate the practical realization of spintronic devices and may also be used to explore novel magneto-optical applications. In this experiments, 3 at% cobalt-doped CeO2 films with the stoichiometry of Ce0.97Co0.03O2-δ (CCO) were deposited by magnetron sputtering methods on Al2O3 (0001) substrates. The structural, magnetic, and magneto-optical properties were investigated. The results indicate that CCO films with CeO2 (100) orientation can readily be obtained via magnetron sputtering on Al2O3 (0001) substrates. Films are ferromagnetic at room temperature, which is anisotropic with an out-of-plane magnetization easy axis. Magneto-optical measurements exhibit a giant Faraday rotation of about 4800 deg/cm at 650 nm wavelength in out-of-plane direction. The excellent room-temperature ferromagnetism and the giant Faraday rotation in CCO films show highly potential applications in novel magneto-optical devices as well as in spintronics.