An ion-beam sputtering (IBS) system has been designed and developed for preparing thin films and multilayers of various elements, alloys and compounds. The ion source used is a 3 cm diameter, hot-cathode Kaufman type 1.5 kV ion source. The system has been successfully tested with the deposition of various materials, and the deposition parameters were optimised for achieving good quality of thin films and multilayers. A systematic illustration of the versatility of the system to produce a variety of structures is done by depositing thin film of pure iron, an alloy film of Fe-Zr, a compound thin film of FeN, a multilayer of Fe-Ag and an isotopic multilayer of (FeZr)-Fe-57/FeZr. Microstructural measurements on these films using X-ray and neutron reflectivity, atomic force microscopy (AFM), and X-ray diffraction are presented and discussed to reveal the quality of the microstructures obtained with the system. It is found that in general, the surface roughnesses of the film deposited by IBS are significantly smaller as compared to those for films deposited by e-beam evaporation. Further, the grain size of the IBS crystalline films is significantly refined as compared to the films deposited by e-beam evaporation. Grain refinement may be one of the reasons for reduced surface roughness. In the case of amorphous films, the roughness of the films does not increase appreciably beyond that of the substrate even after depositing thicknesses of several hundred angstroms. (C) 2002 Elsevier Science B.V. All rights reserved.