Oriented thin films of β-(Ga_1−xFex)₂O₃ were deposited by radio frequency magnetron sputtering on c-Al₂O₃ and GaN substrates. The itinerant character of the Fe 3d states forming the top of the valence band (VB) of the Fe-substituted β-Ga₂O₃ thin films has been determined from resonant photoelectron spectroscopy. Further, the admixture of the itinerant and localized characters of these Fe 3d states has been obtained for larger binding energies; i.e. deeper in the VB. The bottom of the conduction band (CB) for β-(Ga1−xFex)₂O₃ has been also found to have strongly hybridized states involving Fe 3d and O 2p states compared to that of Ga 4s in pristine β-Ga₂O₃. This suggests that β-Ga₂O₃ transforms from a band-like system to a charge-transfer system with Fe substitution. Furthermore, the bandgap red shifts with Fe composition, which has been found to be primarily related to the shift of the CB edge.