Zn1-xErxO (0.005 ≤ x ≤ 0.04) thin films have been prepared by inductively coupled plasma enhanced physical vapor deposition method. Ferromagnetism, crystal structure, microstructure and photoluminescence properties of the films were characterized. It is found that the chemical valence state of Er is trivalent, and the Er3+ cations play an important role in ferromagnetism. Both saturated magnetization (Ms) and zinc vacancy (VZn) are decreased with the increase of x from 0.005 to 0.03. However, further increasing x to 0.04, the Ms is quenched due to the generation of Er clusters. It reveals that the intensity of Ms is not only associated with the VZn concentration, but also related to the Er clusters. The VZn concentration and the Er clusters can jointly boost the ferromagnetism in the Zn1-xErxO thin films.