Epitaxial indium-tin oxide (ITO) thin films were fabricated on a yttria-stabilized zirconia (YSZ) substrate by pulsed-laser deposition using magnetite (Fe(3)O(4)) nanoparticle dispersed ITO powders as a target. Magnetoresistance of the film at a field of 1 T was 39% at 45 K, and it stayed at 3% above 225 K. The film demonstrated cooling hysteresis in the temperature dependence of direct-current magnetization. Transmission electron microscopy revealed that phase-separated Fe(3)O(4) nanocrystals with widths of approximately 40-150 nm and heights of approximately 10-25 nm precipitated and grew epitaxially on the substrate in the film. Both the Fe(3)O(4)(111) and ITO(001) planes were parallel to the YSZ(001) plane. The Fe(3)O(4)(11-2) and -(1-10) planes were parallel to the ITO(100) and -(010) planes, respectively, and the planes connected smoothly at the grain boundary. The contour map of the electron density for the Fe(3)O(4)(111) plane by the first-principles electronic structure computation was similar to that for the ITO(001) plane. The [111]-oriented Fe(3)O(4) nanocrystals played the role of spin aligner for charge carriers of the epitaxial ITO film.