We report the observation of spatially separated Kondo scattering and ferromagnetism in anatase Ta0.06Ti0.94O2 thin films as a function of thickness (10-200 nm). The Kondo behavior observed in thicker films is suppressed on decreasing thickness and vanishes below ∼25 nm. In 200 nm film, transport data could be fitted to a renormalization group theory for Kondo scattering though the carrier density in this system is lower by two orders of magnitude, the magnetic entity concentration is larger by a similar magnitude and there is strong electronic correlation compared to a conventional system such as Cu with magnetic impurities. However, ferromagnetism is observed at all thicknesses with magnetic moment per unit thickness decreasing beyond 10 nm film thickness. The simultaneous presence of Kondo and ferromagnetism is explained by the spatial variation of defects from the interface to surface which results in a dominantly ferromagnetic region closer to substrate-film interface while the Kondo scattering is dominant near the surface and decreasing towards the interface. This material system enables us to study the effect of neighboring presence of two competing magnetic phenomena and the possibility for tuning them.