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Nanocrystalline Zinc oxide (ZnO) thin films were prepared by using physical vapor deposition under a vacuum of 5 × 10-5 Torr by using rf magnetron sputtering technique at different substrate temperatures ranging from 373K to 573K . X-ray diffraction analysis (XRD) indicates that the films are polycrystalline, with strong preferential orientation of grains along the c-axis irrespective of their substrate temperature. The microstructural parameters, such as the lattice constant, crystallite size, stress, strain and dislocation density are calculated.The effect of substrate temperature on the deposited films was discussed. The grain size of the deposited ZnO films is observed to be small and is within the range of 11 to 48 nm. The grain size is observed to be increase from 11.72 to 48.52 nm with increasing substrate temperature. Optical measurements indicate the existence of a direct-band gap-allowed optical transition with a corresponding energy gap in the range of 3.26 3.32 eV.The films posses high transmittance over 90 % in the visible region and sharp absorption edge near 380 nm.