We present a first-principles study on surface structures of In2O3 and indium tin oxide (ITO) nanoparticles upon exposure to O2 and H2O molecules. It was found that dissociative chemisorption of O2 and H2O is facile on the metal-terminated oxide surfaces. O2 chemisorption is energetically more favorable than H2O dissociative chemisorption until the metal-terminated surfaces are saturated by chemisorbed O2 dimers, at which point the surfaces become virtually identical to the O-terminated surfaces and the dissociative chemisorption of H2O becomes the energetically preferred process. The calculated surface structures and the surface states as represented by the density of states spectra are in good agreement with experimental surface characterizations and the UPS photoelectron spectra of In2O3 and ITO thin films.