Indium tin oxide (ITO) thin films were deposited on polyethylene napthalate (PEN) by rf sputtering using different rf powers (60 and 120 W) and at different substrate temperatures (room temperature and 100 °C). Rutherford backscattering spectrometry was used to determine the oxygen content in the films. Hall effect measurements were used to evaluate the electrical properties. In this paper the influence of defect structure, sputtering conditions, and the effect of annealing on the electrical and optical properties of ITO on PEN have been investigated. Electrical properties such as carrier concentration, mobility, and resistivity of the ITO films varied with rf power and substrate temperature. The electricalproperties of the films changed after annealing in air. This study also describes how the as-deposited amorphous ITO changes from amorphous to crystalline as a result of heat treatment, and investigates the effects of Sn defect clustering on electrical and optical properties of the ITO films.