Effect of thermal annealing in different ambients on the structural, electrical and optical properties of the sol-gel derived ZnO thin films are studied. XRD results show that the annealed ZnO films with wurtzite structure are randomly oriented. Crystallite size, carrier concentration, resistivity and mobility are found to be dependent on the annealing temperature. The change in carrier concentration is discussed with respect to the removal of adsorbed oxygen from the grain boundaries. The highest carrier concentration and lowest resistivity are 8 x 10(18) cm(-3) and 2.25 x 1.0(-1) Omega cm, respectively, for the film annealed at 500 degrees C in vacuum. The annealed films are highly transparent with average transmission exceeding 80% in the wavelength region of 400-800 nm. In all three arnbients, the optical band gap value does not change much below 500 degrees C temperature while above this temperature band gap value decreases for nitrogen and air and increases for vacuum. (C) 2005 Elsevier Ltd. All rights reserved.