Usually metallicity accompanies ferromagnetism. K2Cr8O16 is one of the less common examples of magnetic materials, exhibiting ferromagnetism in the insulating state. Analyzing the electronic and magnetic properties within first principles electronic structure calculations, we find that the doped electrons due to K induce a charge-ordered and insulating ground state and interestingly also introduce a ferromagnetic coupling between the Cr ions. The primary considerations driving the charge ordering are found to be electrostatic ones with the charge being localized on two Cr atoms that minimize the electrostatic energy. The structural distortion that accompanies the ordering gives rise to a rare example of a charge-order driven ferromagnetic insulator.