To enable an understanding and optimization of the optoelectronic behavior of CdTe-ZnO nanocomposites, the morphological and chemical properties of annealed CdTe/ZnO interface structures were studied. For that purpose, CdTe layers of varying thickness (4–24 nm) were sputter-deposited on 100 nm-thick ZnO films on surface-oxidized Si(100) substrates. The morphological and chemical effects of annealing at 525 °C were investigated using X-ray Photoelectron Spectroscopy (XPS), X-ray-excited Auger electron spectroscopy, energy dispersive X-ray spectroscopy, scanning electron microscopy, and atomic force microscopy. We find a decrease of the Cd and Te surface concentration after annealing, parallel to an increase in Zn and O signals. While the as-deposited film surfaces show small grains (100 nm diameter) of CdTe on the ZnO surface, annealing induces a significant growth of these grains and separation into islands (with diameters as large as 1 μm). The compositional change at the surface is more pronounced for Cd than for Te, as evidenced using component peak fitting of the Cd and Te 3d XPS peaks. The modified Auger parameters of Cd and Te are also calculated to further elucidate the local chemical environment before and after annealing. Together, these results suggest the formation of tellurium and cadmium oxide species at the CdTe/ZnO interface upon annealing, which can create a barrier for charge carrier transport, and might allow for a deliberate modification of interface properties with suitably chosen thermal treatment parameters.