Mg doped ZnO films with hexagonal wurtzite structure were deposited on c-cut sapphire Al2O3 substrates by pulsed laser deposition. Both room temperature ferromagnetism and band gap of the films simultaneously tuned by the concentration of oxygen vacancies were performed. Our results further reveal that the singly occupied oxygen vacancies should be responsible for the room temperature ferromagnetism and band gap narrowing. Singly occupied oxygen vacancies having the localized magnetic moments form bound magnetic polarons, which results in a long-range ferromagnetic ordering due to Mg doping. Moreover, band gap narrowing of the films is probably due to the formation of impurity band in the vicinity of valence band, originating from singly occupied oxygen vacancies. These results may build a bridge to understand the relationship between the magnetic and optical properties in oxide semiconductor, and are promising to integrate multiple functions in one system. (C) 2016 Elsevier B.V. All rights reserved.