The manganese doped indium tin oxide (ITO) has integrated magnetics, electronics, and optical properties for next generation multifunctional devices. Our first-principles density functional theory (DFT) calculations show that the manganese atom replaces b-site indium atom, located at the second coordination shell of the interstitial oxygen in ITO. It is also found that both anti-ferromagnetic and ferromagnetic behaviors are realizable. The calculated magnetic moment of 3.95 μ B/Mn as well as the high transmittance of ∼ 80% for a 150 nm thin film of Mn doped ITO is in good agreement with the experimental data. The inclusion of on-site Coulomb repulsion corrections via DFT+U methods turns out to improve the optical behavior of the system. The optical behaviors of this system reveal its suitability for the magneto-opto-electronic applications.