The effect of post-annealing on the transparent and conductive Al-doped zinc oxide films prepared by RF magnetron sputtering technique was investigated. The structural characteristics of the as-deposited and annealed films were determined by X-ray diffraction (XRD), scanning electron microscopy (SEM) and X-ray photoelectron spectroscopy (XPS) while the resistance of films during annealing was measured in situ. It is shown that the as-deposited films were flat and smooth, but with plasma etching morphology on the surface, nevertheless, a decrease in roughness was found after the films were air annealed. A significant grain agglomeration into cluster was observed after hydrogen annealing at 500 degreesC. Optical transmissions reveal a good transmittance within the visible wavelength spectrum region for all of the films. The resistance of the air-annealed films was increased due to a large number of oxygen chemisorbed on surface and grain boundaries as measured by XPS. However, it decreased for the films annealed in hydrogen at a higher temperature. The minimum resistivity obtained was 8.76 x 10(-4) Omega cm as annealed at 500 degreesC for 1 h in hydrogen atmosphere.