Nanostructured Fe doped ZnO thin films were deposited onto glass substrates by sol-gel spin coating method. Influence of Fe doping concentration and annealing temperature on the structural, compositional, morphological and optical properties were investigated using X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS), scanning electron microscopy (SEM), UV-Vis spectroscopy and photoluminescence (PL) measurements. XRD analysis showed that all the films prepared in this work possessed a hexagonal wurtzite structure and were preferentially oriented along the c-axis. Pure ZnO thin films possessed extensive strain, whereas Fe doped films possessed compressive strain. In the doped films, least value of stress and strain was observed in the 0.5 at.% Fe doped thin film, annealed at 873 K. Average crystallite size was not significantly affected by Fe doping, but it increased from 15.57 to 17.79 nm with increase in annealing temperature from 673 to 873 K. Fe ions are present in +3 oxidation state as revealed by XPS analysis of the 0.5 at.% Fe doped film. Surface morphology is greatly affected by changes in Fe doping concentration and annealing temperature which is evident in the SEM images. The increase in optical band gap from 3.21 to 3.25 eV, with increase in dopant concentration was attributed to Moss-Burstein shift. But increase in annealing temperature from 673 to 873 K caused a decrease in band gap from 3.22 to 3.20 eV. PL spectra showed emissions due to excitonic combinations in the UV region and defect related emissions in the visible region in all the investigated films. © Springer Science+Business Media New York 2013.