(CdO)(y)(ZnO)(1-y) thin films have been prepared by the sol-gel process, based on precursor solutions used separately for such oxides. The Cd/(Cd + Zn) atomic ratio in solution ranged from 0 to 0.32. These compositions were selected on the basis of an observed abrupt fall, of ca. four orders of magnitude. in the resistivity of the films within this range. Such a resistivity drop. with a threshold value of around y = 0.17, is consistent with a percolation mechanism in a three-dimensional. random, two-phase system composed of isotropic, sphere-like, conducting CdO regions embedded in a highly resistive ZnO matrix. Optical measurements show that the films are highly transparent. above 90% transmission, for wavelengths greater than or equal to600 nm. The optical absorption edge shifts to longer wavelengths as the Cd content in the film increases. On the basis of the percolation mechanism observed in the multicomponent system (CdO)(y)(ZnO)(1-y), possible future pathways are proposed for the design and construction of highly efficient, transparent, conducting oxides.