Metal-insulator transition is observed in the La0.8Sr0.2MnO3 thin films with thickness larger than 5 unit cells. Insulating phase at lower temperature appeared in the ultrathin films with thickness ranging from 6 unit cells to 10 unit cells and it is found that the Mott variable range hopping conduction dominates in this insulating phase at low temperature with a decrease of localization length in thinner films. A deficiency of oxygen content and a resulting decrease of the Mn valence have been observed in the ultrathin films with thickness smaller than or equal to 10 unit cells by studying the aberration-corrected scanning transmission electron microscopy and electron energy loss spectroscopy of the films. These results suggest that the existence of the oxygen vacancies in thinner films suppresses the double-exchange mechanism and contributes to the enhancement of disorder, leading to a decrease of the Curie temperature and the low temperature insulating phase in the ultrathin films. In addition, the suppression of the magnetic properties in thinner films indicates stronger disorder of magnetic moments, which is considered to be the reason for this decrease of the localization length.