The effects of substrate temperature and post-deposition heat treatment steps on the morphology, structural, optical and electrical properties of thin film CdTe layers grown by vacuum evaporation were investigated. Scanning electron microscopy and X-ray diffraction (XRD) techniques were employed to study the structural changes. It was observed that the grain sizes and morphologies of as-deposited layers were similar for substrate temperatures of - 173 degrees C and - 73 degrees C. However, CdTe films produced at a substrate temperature of 27 degrees C had substantially larger grain size and clearly facetted morphology. Annealing at 200-400 degrees C in air did not cause any appreciable grain growth in any of the films irrespective of their growth temperature. However, annealing at 400 degrees C reduced faceting in all cases and initiated fusing between grains. XRD studies showed that this behavior after annealing at 400 degrees C coincided with an onset of a degree of randomization in the originally strong (I 11) texture of the as-grown layers. Optical band gap measurements showed sharpening of the band-edge upon annealing at 400 degrees C and a band gap value in the range of 1.46-1.49 eV Resistivity measurements indicated that annealing at 400 degrees C in air forms a highly resistive compensated CdTe film. All results point to 400 degrees C to be a critical annealing temperature at which optical, structural and electrical properties of CdTe layers start to change. (c) 2006 Elsevier B.V. All rights reserved.