High-quality epitaxial La0.7Sr0.3Mn1-xFexO3 (LSMFO) thin films have been successfully prepared on SrTiO3 single-crystal substrates by pulsed laser deposition. No structural changes were observed for x less than or equal to 0.12. For x = 0.2, an elongation in the a-axis direction was identified. An antiferromagnetic arrangement of Fe and Mn ions over the whole Fe-doping region and a canted spin structure at x greater than or equal to 0.12 were observed. Unlike the case for the bulks, only one resistivity peak was observed for the epitaxial films. This shows that one of the two resistivity peaks for polycrystalline LSMFO bulks has its origin in grain boundaries. The effect of Fe doping can be attributed to a combination of doping disorder, Fe-Mn superexchange interactions and a site-percolation mechanism, which suppress the metallic conduction and ferromagnetism. In epitaxial LSMFO thin films, extrinsic magnetoresistance (MR) related to grain boundary effects was excluded. The intrinsic MR is gradually enhanced with increasing Fe concentration. For the film with x = 0.12, a fairly large MR = 12% was observed in a small field of 4 kOe at 145 K. For those films, the resistivity above T, (the ferromagnetic Curie temperature) follows the Emin-Holstein model for small polarons. The polaron activation energy is enhanced due to weakening of the local double-exchange ferromagnetism by Fe doping. The fitting results indicate that the lattice polarons are magnetic in nature and that non-nearest-neighbour polaron hopping exists. The resistivity below T, (the resistivity peak temperature) follows an empirical relation, rho (T, H) = rho (0) + rho (2)(H)T-2 + rho (7.5)(H)T-7.5. It is found that the MR arises mainly from the suppression of T-7.5-terms. The enhanced MR can be attributed to the suppression of the enhanced magnetic scattering and polaron scattering under an external field.