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The origin of insulating ferromagnetism in epitaxial LaCoO3 films under tensile strain remains elusive despite extensive research efforts are devoted. Surprisingly, the spin state of its Co ions, the main parameter of its ferromagnetism, is still to be determined. Here, the spin state in epitaxial LaCoO3 thin films is systematically investigated to clarify the mechanism of strain‐induced ferromagnetism using element‐specific X‐ray absorption spectroscopy and dichroism. Combining with the configuration interaction cluster calculations, it is unambiguously demonstrated that Co3+ in LaCoO3 films under compressive strain (on LaAlO3 substrate) is practically a low‐spin state, whereas Co3+ in LaCoO3 films under tensile strain (on SrTiO3 substrate) have mixed high‐spin and low‐spin states with a ratio close to 1:3. From the identification of this spin state ratio, it is inferred that the dark strips observed by high‐resolution scanning transmission electron microscopy indicate the position of Co3+ high‐spin state, i.e., an observation of a spin state disproportionation in tensile‐strained LaCoO3 films. This consequently explains the nature of ferromagnetism in LaCoO3 films. The study highlights the importance of spin state degrees of freedom, along with thin‐film strain engineering, in creating new physical properties that do not exist in bulk materials. [ABSTRACT FROM AUTHOR]