This work reports detailed investigations of a series of ∼2.6 nm sized, Sn1−xFexO2 crystallites with x = 0–0.10 using Mossbauer spectroscopy, x-ray photoelectron spectroscopy (XPS), electron paramagnetic resonance spectroscopy (EPR), and magnetometry to determine the oxidation state of Fe dopants and their role in the observed magnetic properties. The magnetic moment per Fe ion μ was the largest ∼6.48 × 10−3 μB for the sample with the lowest (0.001%) Fe doping, and it showed a rapid downward trend with increasing Fe doping. Majority of the Fe ions are in 3+ oxidation state occupying octahedral sites. Another significant fraction of Fe dopant ions is in 4+ oxidation state and a still smaller fraction might be existing as Fe2+ ions, both occupying distorted sites, presumably in the surface regions of the nanocrystals, near oxygen vacancies. These studies also suggest that the observed magnetism is not due to exchange coupling between Fe3+ spins. A more probable role for the multi-valent Fe ions may be to act as charge reservoirs, leading to charge transfer ferromagnetism.