Aluminum oxide films have been prepared by ion assisted deposition using argon ions with energy in the range 300 to 1000 eV and current density in the range 50 to 220 μA/cm2. The influence of ion energy and current density on the optical and structural properties has been investigated. The refractive index, packing density, and extinction coefficient are found to be very sensitive to the ion beam parameters and substrate temperatures. The as-deposited films were found to be amorphous and could be transformed into crystalline phase on annealing. However, the crystalline phases were different in films prepared at ambient and elevated substrate temperatures.