To fabricate spintronics devices with easy of processing we require reliable dilute magnetic semiconductors (DMS) at room temperature. Here we report the development of DMS material based on Indium tin oxide (ITO) with optimal tin concentration ((In0.95Sn0.05)2O3). The ITO and Ni-doped ITO nanoparticles were synthesized in quartz tube under reduced pressure at elevated temperature. The stoichiometric samples were crystallined in cubic bixbyite structure with change in the unit cell volume with Ni doping and shown average particle size of 50 nm in electron micrographs. Estimated energy band gap of Ni-doped ITO is found to be 3.15 eV. The magnetic properties of materials revealed that optimal doping of Sn gives highest magnetization and further increase of doping with Ni2+ ions in In3+ sites lead to deterioration of ferromagnetism induced by Sn4+. The observed ferromagnetism is attributed to the localized ferromagnetic exchange interactions induced by spin polarized electrons trapped in oxygen vacancies. The deterioration of ferromagnetism is attributed to excess anionic vacancies created by Ni doing and promotion of antiferromagnetic exchange with increase of Ni2+ ion concentration as evidenced from magnetic hysteresis loop at 100 K. © 2016 VBRI Press.