We studied the optical and electrical properties of InN epilayers with rapid thermal annealing (RTA). The intensity of the photoluminescence (PL) and the carrier mobility were found to increase as the temperature of RTA was increased. We suggest that the formation of compensating acceptors (indium vacancies) after RTA is responsible for the improvement of the quality in InN. The dependence of the PL emission peak on carrier concentration provides a possible method for estimating the carrier concentration in degenerate InN.