Indium tin oxide (ITO) layers were prepared by electron beam evaporation with high oxygen pressure at low substrate temperatures. These layers show a low transparency in the visible range, a high electrical resistivity and can be transformed by heat treatment in oxygen atmosphere into a transparent and conducting ITO phase and thereby show a significant change of optical and electrical properties. In this work the transformation process of these layers into transparent and conducting ITO layers by heat treatment in different oxygen atmospheres was studied to understand a similar transformation process done with laser heating. The transformation process was observed by in situ measurements of the electrical resistance of the thin films. Changes of material properties like optical transmittance. electrical resistivity. optical bandgap and activation energy in a wide range were found, obviously caused by changes of the oxygen concentration and the binding states of the oxygen atoms. (c) 2006 Elsevier B.V. All rights reserved.