Epitaxial cobalt doped TiO₂ anatase thin films were deposited on (001) oriented SrTiO₃ single crystal substrates at 120 째C by liquid phase deposition. X-Ray diffraction, photoelectron and absorption spectroscopies revealed that cobalt substituted Ti⁴⁺ predominantly as low spin Co³⁺ in the as formed films as a result of the oxidizing environment of the growth solution. Enhanced ferromagnetism was observed in films when annealed in vacuum and air as Co³⁺ was reduced to Co²⁺ with no evidence of cobalt metal clusters forming. The insulating nature of the films indicated that ferromagnetism was not carrier-mediated but due to percolation of bound magnetic polarons.