We report the microstructural evolution of the preferred orientation and electrical conductivity of zinc oxide (ZnO) thin films prepared by ion beam sputtering. Elastic recoil detection analysis results showed 0.6 at% H in as-deposited film which decreased to 0.35 at% in air annealed film due to H diffusion. XRD results showed that the preferred orientation can be tuned by selecting annealing conditions. Vacuum annealed films exhibited (1 0 0) orientation, whereas air annealed film showed (0 0 2) orientation. The annealing conditions caused a dramatic increase in the resistivity of air annealed films (similar to 10(6) Omega cm), whereas vacuum annealed films showed lower resistivity (similar to 10(-2) Omega cm). High resistivity in air annealed film is attributed to the lack of hydrogen interstitials and hydrogen-oxygen vacancy complexes. Raman results supported the XRD results which demonstrated that annealing assisted in recovery of the crystalline disorder in as-deposited films. Air annealed film exhibited the highest optical transmission (89.7%) in the UV-vis region compared to as-deposited and vacuum annealed films (similar to 85%). Optical bandgap was found to vary between 3.11 eV and 3.18 eV in as-deposited and annealed films, respectively. The bandgap narrowing is associated with the intrinsic defects which introduced defect states resulting in band tail in ZnO films. (C) 2016 Elsevier B.V. All rights reserved.