Various effects of annealing on the optical and structural properties of sputtered ZnO layers have been investigated. ZnO layers were sputtered on Si (111) substrates and annealed at 700-900 degrees C under H2O atmosphere. Optical and structural properties along with surface morphologies were estimated by using photoluminescence (PL), X-ray diffraction (XRD), and atomic force microscopy (AFM), respectively. Improvement of crystal quality was observed up to 800 degrees C, however, it deteriorated at higher annealing temperature due to the enhanced interdiffusion of ZnO layer and Si substrate. Transmission electron microscopy (TEM) and Auger electron spectroscopy (AES) were used to characterize the microstructure of ZnO layers. An amorphous interfacial layer is found owing to strong interdiffusion at the interface, and the reduction of the layer thickness as a result of interdiffusion is observed, which is responsible for the degradation of ZnO layer. (c) 2005 Elsevier B.V. All rights reserved.