The aim of this work is to investigate the optical constants of aluminum doped zinc oxide films annealed at different temperatures. With increasing temperature, due to decreasing unfilled inter-granular volume per unit thickness, the optical transmittance spectra of films were increased. The films have a normal dispersion in the spectral range 400 < λ < 500 nm and the anomalous dispersion in IR range. The lattice dielectric constants εL, the free charge carriers concentration, the plasma frequency, Spitzer–Fan model and the waste of electrical energy as heat of films can be analyzed using the refractive index n and the extinction coefficient k spectra. With increasing annealing temperature, the lattice dielectric constants εL of films decrease however the free charge carriers concentration of films increase. The free carrier electric susceptibility of films annealed at 600 °C has maximum value. The energy loss by the free charge carriers when traversing the bulk and surface of films annealed at 600 °C has a minimum value in the near fundamental absorption edge and it with increasing energy increases.