We have investigated effects of MgO buffer layers and its annealing on the structural quality of ZnO layers grown on Al2O3(0001) by plasma assisted molecular beam epitaxy (P-MBE). It was found that surface morphology and crystalline quality of ZnO layers were improved by employing thin MgO buffer layers. Furthermore, annealing of the MgO buffer at high temperatures enhanced the surface migration of adatoms, leading to the formation of larger terraces and smoother surface morphology. We speculate that the relaxation of strain in the MgO buffer contributes to lowering of the surface energy. The dislocation density of ZnO layers was also reduced from 5.3 X 10(9) cm(-2) to 1.9 X 10(9) cm(-2) by annealing a low temperature (LT) MgO buffer. (C) 2003 Elsevier B.V. All rights reserved.