We report on a study of the physical properties of ZnTe:Cu films with Cu content up to ∼12 at. % prepared using rf magnetron sputtering. The composition and lateral homogeneities are studied using X-ray photoelectron spectroscopy (XPS). Atomic force microscopy measurements on films deposited at different substrate temperatures (up to 325 °C) yielded activation energy of 12 kJ/mole for the grains growth. The results of XPS and electrical and optical measurements provide evidence for the formation of the ternary zinc copper telluride alloy in films containing Cu concentration above ∼4 at. %. The XPS results suggest that copper is incorporated in the alloy with oxidation state Cu1+ so that the alloy formula can be written Zn1−yCuy Te with y = 2−x, where x is a parameter measuring the stoichiometry in the Cu site. The formation of this alloy causes appreciable shift in the binding energies of the XPS peaks besides an IR shift in the energy band gap. Detailed analysis of the optical absorption data revealed the presence of two additional transitions, besides the band gap one, originating from the Γ8 and Γ7 (spin-orbit) valence bands to a donor level at ∼0.34 eV below the Γ6 conduction band. This interpretation yields a value for the valence band splitting energy Δ ≅ 0.87 eV independent of copper concentration. On the other hand, the mechanism of formation of the alloy is tentatively explained in terms of a point defect reaction in which substitutional Cu defect CuZn is also created. Assuming that substitutional Cu is the dominant acceptor in the Zn rich alloy as in ZnTe, its formation energy was determined to be 1.7 eV close to the theoretical value (1.41 eV) in ZnTe.