Indium-doped Cd1-xZnxTe (CZT:In) single crystals were annealed by a two-step method, including a high-temperature step and a low-temperature step in sequence. IR transmittance spectrum, I-V curve and PL spectrum were used to characterize the CZT single crystals. After annealing, the opto-electrical properties of the CZT:In crystals were improved obviously. The average IR transmittance was remarkably increased by about 23%, and the resistivity was enhanced by as high as four orders of magnitude. In the PL spectra, the intensity of the (D-0, X) peak prominently increased, and the full-width-at-half-maximum was reduced. Meanwhile, the intensity of the DAP peak decreased greatly, and the structure became practically indistinguishable from the background. Moreover, the intensity of the D-complex peak also decreased. The investigation shows that these improvements in the physical properties after annealing are due to variations in the micro-structures. The two-step annealing method can eliminate precipitates/inclusions, remove impurities, compensate Cd vacancies, decrease dislocations and reduce internal stress. (C) 2010 Elsevier B.V. All rights reserved.