In this study we explore, both from theoretical and experimental side, the effect of Fe doping in ZrO2 (ZrO2:Fe). By means of first principles simulation, we study the magnetization density and the magnetic interaction between Fe atoms. We also consider how this is affected by the presence of oxygen vacancies and compare our findings with models based on impurity band [J.M.D. Coey, M. Venkatesan, C.B. Fitzgerald, Nat. Mater. 4, 173 (2005)] and carrier mediated magnetic interaction [T. Dietl, H. Ohno, F. Matsukura, J. Cibert, D. Ferrand, Science 287, 1019 (2000)]. Experimentally, thin films (≈20 nm) of ZrO2:Fe at high doping concentration are grown by atomic layer deposition. We provide experimental evidence that Fe is uniformly distributed in the ZrO2 by transmission electron microscopy and energy dispersive X-ray mapping, while X-ray diffraction evidences the presence of the fluorite crystal structure …