The vanadium oxide thin films were deposited by reactive dc magnetron sputtering technique. Among the various process parameters, the O₂ concentration in the chamber was chosen as the major parameter and was varied in the range of 2, 4, 6, and 8% O₂ in O₂/Ar gas. As the O₂ concentration increases, the crystallinity of vanadium oxide was decreased. Only in the condition of 2% O₂ concentration, good crystalline vanadium oxide thin film was formed. The grain shape and grain size were also changed with increasing O₂ concentration. The O₂ concentration in the chamber plays a key role in depositing vanadium oxide by dc magnetron sputtering.