This thesis focuses on fabrication, characterization and understanding physical properties of transparent and conductive Al doped zinc oxide (ZnO) thin films. Films were deposited by magnetron sputtering technique, using separate ZnO and Al targets. SiO2 and glass (microscope slides) were used as substrates. Growths were performed at room temperature in Ar environment at a constant pressure of 3 mTorr. Films were characterized by atomic force microscope, x-ray diffractometer, scanning electron microscope, UV-vis spectroscophotometer and four point probe electrical measurements. Using transmission data, band gaps of the films and using four point probe measurements, resistivities of films were calculated. Firstly properties of pure ZnO films were studied. They were found to be highly transparent; however their resistivity was very high that we could not measure with our instrument. Therefore, ZnO films were uniformly doped with Al. It was seen that decreasing Al content was improving electrical and optical properties. Al concentration of the films was decreased firstly by decreasing deposition power of Al. After that, content was further decreased by depositing stacks of doped and undoped layers (modulation doping). Following that, modulation doped films were deposited with applying RF bias power to substrates. All films were annealed at 300oC for 1 hour in vacuum. The lowest resistivity obtained in this study was 1.68x10-3 .cm. Transmittance and band gap of the corresponding film were 80% and 4.1 eV respectively. The film was fabricated by modulation doping accompanied with substrate bias of 10 W, followed by annealing at 300oC in vacuum.