Thin films of Zn $_{1-x}$ Cdx O with x = 0, 0.1, 0.2, 0.3, 0.4 and 0.5 at.% were deposited by electron-beam evaporation technique. It has been found that, for as-deposited films, both the transmittance and electrical resistivity decreased with increasing the Cd content. To improve the optical and electrical properties of these films, the effect of annealing temperature and time were taken into consideration for Zn $_{1-x}$ Cdx O film with x = 0.2. It was found that, the optical transmittance and the electrical conductivity were improved significantly with increasing the time of annealing. At fixed temperature of 300 °C, the transmittance increased with increasing the time of annealing and reached its maximum values of 81% in the visible region and 94% in the NIR region at annealing time of 120 min. The low electrical resistivity of 3.6 × 10−3 Ω cm was achieved at the same conditions. Other parameters named free carrier concentrations, refractive index, extinction coefficient, plasma frequency, and relaxation time were studied as a function of annealing temperature and time for 20% Cd content.