A low production cost and non-toxic metal-oxide semiconductor, Al-doped zinc oxide (AZO), are used as a channel layer to fabricate AZO thin-film transistor. The effect of sputtering power density and post annealing temperature on the performance of AZO TFTs are respectively investigated. The AZO TFTs sputtered at 5.92 W/cm2 and annealed at 200 °C show good device performance while the AZO TFTs sputtered at 4.44 W/cm2 and annealed at 180 °C exhibit the good positive bias stress reliability. All the test results indicate that the sputtering power density and annealing temperature are two important factors in optimizing the electrical performance of AZO TFTs.