With the motive of unraveling the origin of native vacancy induced magnetization in ferroelectric perovskite oxide systems, here we explore the consequences of electronic structure modification in magnetic ordering of oxygen deficient epitaxial BaTiO[Formula: see text] thin films. Our adapted methodology employs state-of-the-art experimental approaches viz. photo-emission, photo-absorption spectroscopies, magnetometric measurements duly combined with first principles based theoretical methods within the frame work of density functional theory (DFT and DFT+U) calculations. Oxygen vacancy (O[Formula: see text]) is observed leading partial population of Ti 3d (t 2g ), which induces defect state in electronic structure near the Fermi level and reduces the band gap. The oxygen deficient BaTiO2.75 film reveals Mott-Hubbard insulator characteristic, in contrast to the band gap insulating nature of the stoichiometric BaTiO3. The observed magnetic ordering is attributed to the asymmetric distribution of spin polarized charge density in the vicinity of O[Formula: see text] site, which originates unequal magnetic moment values at first and second nearest neighboring Ti sites, respectively. Hereby, we present an exclusive method for maneuvering the band gap and on-site electron correlation energy with consequences on magnetic properties of BaTiO[Formula: see text] system, which can open a gateway for designing novel single phase multiferroic system.