The single phase Pb(0.8)Co(0.2)TiO3 thin films were synthesized on a Pt/Ti/SiO2/Si substrate by the sol-gel route. The present films exhibited homogeneous microstructure with low porosity. O 1s X-ray photoelectron spectroscopy (XPS) was used to detect the amount of oxygen vacancies. The ferroelectric measurements showed that the ferroelectricity deteriorates with the increase in the number of oxygen vacancies. X-ray absorption spectroscopy (XAS) and XPS were used to study the electronic structure. The results indicated that the decreased ferroelectricity might be ascribed to the weakened hybridization between O 2p and Pb 6s and Ti 3d orbitals. The ferromagnetic behaviors were also observed in the thin films and saturated magnetization raised monotonously with the oxygen vacancy rising due to the enhanced F-center exchange interaction. Magnetoelectric coupling of the films weakened with oxygen vacancy increase.