Al-doped zinc oxide (AZO) films are prepared by RF magnetron sputtering on glass and Si substrates with specifically designed ZnO targets containing different amounts of Al2O3 powder as a doping source. The physical properties of the AZO films are investigated in terms of the preparation conditions, such as Al2O3 content in the target, RF power (P-RF), substrate temperature (T-s) and working pressure (P-w). The crystal structure of the AZO film is hexagonal wurtzite, and all the films show the typical crystallographic orientation, with the c-axis perpendicular to the substrate. The growth rate increases with increasing P-RF, but decreases with increasing T-s and P-w. Films 1500 Angstrom thick with the lowest resistivity (rho) of 4.7 X 10(-4) Ohm cm and the transmittance over 90% at the visible region are prepared by using norminal 3 wt.% Al2O3 target at T-s = 150 degrees C, P-w = 2 mTorr and P-RF = 150 W. Optical transmittance measurements show that AZO films are degenerate semiconductors with direct bandgap. The optical energy bandgap for undoped ZnO film is similar to 3.3 eV and those for AZO films increase as the carrier concentration (n(e)) in the film increases. The blue shift in the AZO films is proportional to one third power of n(e).