Au/ZnO nanocomposite films were prepared by co-sputtering of ZnO and gold wires. The composite films were transparent and red in color due to surface plasmon resonance absorption of small Au particles. The composite films were annealed at different temperatures in argon atmosphere to study the evolution of the size of An particles and subsequent change in their optical properties. With the increase of annealing temperature, the size of the Au particles increased and the intensity of plasmon resonance absorption peak increased.