We have studied the electronic structure of Zn$_{0.9}$Fe$_{0.1}$O nano-particles, which have been reported to show ferromagnetism at room temperature, by x-ray photoemission spectroscopy (XPS), resonant photoemission spectroscopy (RPES), x-ray absorption spectroscopy (XAS) and x-ray magnetic circular dichroism (XMCD). From the experimental and cluster-model calculation results, we find that Fe atoms are predominantly in the Fe$^{3+}$ ionic state with mixture of a small amount of Fe$^{2+}$ and that Fe$^{3+}$ ions are dominant in the surface region of the nano-particles. It is shown that the room temperature ferromagnetism in the Zn$_{0.9}$Fe$_{0.1}$O nano-particles is primarily originated from the antiferromagnetic coupling between unequal amounts of Fe$^{3+}$ ions occupying two sets of nonequivalent positions in the region of the XMCD probing depth of $sim$ 2-3 nm.
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