Indium tin oxide (ITO) thin films were prepared by high power impulse magnetron sputtering (HiPIMS) and annealed in hydrogen-containing forming gas to reduce the film resistivity. The film resistivity reduces by nearly an order of magnitude from 5.6 × 10−3 Ω·cm for the as-deposited film to the lowest value of 6.7 × 10−4 Ω·cm after annealed at 700 °C for 40 min. The role of hydrogen (H) in changing the film properties was explored and discussed in a large temperature range (300–800 °C). When annealed at a low temperature of 300–500 °C, the incorporated H atoms occupied the oxygen sites (Ho), acting as shallow donors that contribute to the increase of carrier concentration, leading to the decrease of film resistivity. When annealed at an intermediate temperature of 500–700 °C, the Ho defects are thermally unstable and decay upon annealing, leading to the reduction of carrier concentration. However, the film resistivity keeps decreasing due to the increase in carrier mobility. Meanwhile, some locally distributed metallic clusters formed due to the reduction effect of H2. When annealed at a high temperature of 700–800 °C, the metal oxide film is severely reduced and transforms to gaseous metal hydride, leading to the dramatic reduction of film thickness and carrier mobility at 750 °C and vanish of the film at 800 °C.