Ordered Fe-doped In2O3 nanodot arrays with diameters between 35 nm and 80 nm are fabricated using pulsed laser deposition with the aid of ultrathin porous anodized aluminumoxide templates. The 5 at.% Fe doped In2O3 nanodot arrays are shown to consist of the cubic bixbyite structure of In2O3. The nanodot arrays are demonstrated to be doped by Fe ions with mixed valences of +2 and +3, ruling out the presence of cluster and secondary phase related to Fe. The nanodot arrays exhibit the ferromagnetism at room temperature, where the magnetic moment increases as the dot size is reduced, rising to a maximum of about 230 emu/cm3 (equivalent to an average moment on the Fe ions of 15.30 µB/Fe). This indicates an effect due to the surface of the nanodot arrays. The optical band width is also increased to 4.55 eV for the smallest dot array, thus indicating that the surface states are responsible for the magnetism and also enhance the band gap due to Burstein-Moss effect. Our results will be benefit for understanding the physical properties of oxide semiconductor nanostructures in the application of nano-spintronics devices.