A solution method for preparing indium-tin oxide (ITO) powders is provided. Indium compounds and tin compounds are dissolved in water respectively to form two solution bodies. Some proper additives are added into the solution bodies to form metal hydroxyl compounds with determined composition. After water washing and filtration, proper additives are added into the solution to peptize the solution. During the peptization process, hydrolysis and condensation reactions occurs between different metal hydroxyl compounds. Solvent of the solution is then removed to form high quality nanometer grade ITO powders.