The effects of CdCl2 processing on the physical and electro-optical properties of CdTe were evaluated for thin films produced by physical vapor deposition and close-spaced sublimation (CSS). Two substrates (CdS and Indium-tin-oxide) were used with the physical vapor deposition (PVD) films specifically to isolate the effects of the Cd(SxTe1-x) alloy formed during the treatment of films deposited on CdS. The samples were analyzed by x-ray diffraction (XRD), atomic force microscopy (AFM), and photoluminescence. The observed changes in microstructure were caused by recrystallization, which consisted of the nucleation and development of a new CdTe structure and subsequent grain growth. Nevertheless, for these processes to take place, it was necessary that enough lattice-strain energy was available in the films; For this reason, PVD films did recrystallize, while CSS films did not. For the first time, recrystallization was observed directly in AFM images of CdTe films and confirmed by XRD analysis, which indicated the existence of two lattice parameters in PVD samples treated at 350 degrees C. For samples treated at 400 degrees C, the CdCl2 treatment improved the minority-carrier lifetime of the films by more than one order of magnitude. This improvement was attributed to the elimination of deep defect levels within the band gap of the CdTe films as a result of the treatment. The sulfur diffusion into CdTe films deposited on CdS, during the CdCl2 treatment at 400 degrees C, strongly affected the defect structure.