ZnO ultrafine particle (UFP) films were deposited on glass and SiO2 substrates by a direct current gas discharge activated reactive evaporation method. The effect of substrate temperature and annealing on the structure and morphology of ZnO UFP films was studied by x-ray diffraction and scanning electron microscope. The results show that the spherical island density decreases with increasing annealing temperature and the structure becomes polycrystalline with a (002) preferential orientation as the substrate temperature increases. In addition, angle resolved x-ray photoelectron spectroscopy was used to study the absorption of water on the ZnO UFP film surface by measuring the two deconvoluted peaks for O 1s. The two deconvoluted peaks for O 1s were located at 533.2 and 534.8 eV. The absorption coefficients of water on the surface were 0.52 and 0.43, respectively, for nonannealed and annealed ZnO UFP films.