Transparent ZnO films with ferromagnetic spinel iron oxide particles (Fe 9.5 atom %) were preparedon glass substrates by a novel chemical process followed by heat treatment at 773 K under vacuum. Thechemical process involved (i) ZnO deposition from an aqueous solution and (ii) the introduction of ironatoms into the ZnO in another aqueous solution containing iron ions. The microstructure and electronicstructure of the films were characterized in detail by using transmission electron microscope (TEM)analyses, X-ray absorption fine structure (XAFS), and soft X-ray magnetic circular dichroism (SXMCD).TEM observation revealed that the film had a heterogranular structure composed of iron oxide particlesof 20 nm in diameter embedded in a wurtzite ZnO matrix. Both the Fe K-edge XAFS and Fe L
2,3-edgeSXMCD measurements using synchrotron radiation techniques indicated that the iron oxide particleswere zinc-substituted magnetite (Zn
xFe
3-xO
4,
x 0.5) with a cubic spinel structure, which is the originof ferromagnetism. Negative magnetoresistance of -0.35% was found at room temperature as well as ann-type semiconducting feature.