In this paper we report the effect of deposition temperature on the structural and optical properties of ZnO thin films prepared by rf magnetron sputtering. The films grown at lower deposition temperatures were in a state of large compressive stress, whereas the films grown at higher temperature (450 degrees C) were almost stress free. In the absorption spectra, the ZnO excitonic and the Zn surface plasmon resonance (SPR) peaks have been observed. A redshift in the optical band gap of ZnO films has also been observed with the increase in the deposition temperature. The shift in the band gap calculated from the size effect did not match with the observed shift values and the observed shift has been attributed to the compressive stress present in the films. (C) 2008 Published by Elsevier B. V.