Composites are pragmatic choices for tailoring the material to have a desired property. Besides, such thin films have scopes to display superior optical, microstructural and morphological properties which are otherwise not possible to obtain from the pure component films. Vapor-phase-mixed binary composite Gd2O3/SiO2 thin film is one such interesting system where band gap as well as refractive index superiority is observed simultaneously under certain compositional mixings. Such and similar observations in composites cannot be explained by Moss empirical rule. Our systematic study on the microstructure of this composite system based on ellipsometry and scanning probe microscopy has satisfactorily provided the information that can explain such optical properties supremacy. Morphological measurements and its derived parameters like autocorrelation and height-height correlation functions have provided several clues that represent the superior grain structures of the composites. Besides, refractive index modeling through effective single oscillator model has strongly supported such analysis results favoring the superior microstructure in composite films. (c) 2006 Elsevier B.V. All rights reserved.