A discussion of the optical properties of two systems of dielectric films i.e. In2O3 and of mixed oxides In2O3-MoO3 system is presented. Film thickness, substrate temperature, annealing and composition (in molar%) have a profound effect on the structure and optical properties of these films. The decrease in optical band gap with the increase in film thickness of In2O3 is interpreted in terms of incorporation of oxygen vacancies in the In2O3 lattice. The decrease in optical band gap with the increase in substrate temperature and annealing of In2O3 thin films is ascribed to the release of trapped electrons by thermal energy or by the outward diffusion of the oxygen-ion vacancies, which are quite mobile even at low temperature. For the mixed oxides In2O3-MoO3 system the results are found to be compatible with the reduction in the value of optical band gap of these materials as the molar fraction of MoO3 increases in the In2O3 thin films and is attributed to the incorporation of Mo(VI) ions in an In(2)O(3)lattice that causes the indium orbital to become a little less tightly bound. The decrease in optical band gap of mixed oxides In2O3-MoO3 system, with increasing film thickness is interpreted in terms of incorporation of oxygen vacancies in both In2O3 and MoO3 lattice which are also believed to be the source of conduction electrons in In2O3-MoO3 complex. The decrease in optical band gap with increasing substrate temperature and annealing of mixed oxides In2O3-MoO3 system is due to the increasing concentration of oxygen vacancies, formation of indium and molybdenum species of lower oxidation state and indium interstitials. The blue colouration of mixed oxides In2O3-MoO3 samples is due to the inter-electron transfer from oxygen 2p to molybdenum 4d level due to which Mo species of lower oxidation states are formed. (c) 2006 Springer Science + Business Media, Inc.