Gallium nitride (GaN), aluminum nitride (AlN), and AlxGa1−xN films have been deposited by hollow cathode plasma-assisted atomic layer deposition at 200 °C on c-plane sapphire and Si substrates. The dependence of film structure, absorption edge, and refractive index on postdeposition annealing were examined by x-ray diffraction, spectrophotometry, and spectroscopic ellipsometry measurements, respectively. Well-adhered, uniform, and polycrystalline wurtzite (hexagonal) GaN, AlN, and AlxGa1−xN films were prepared at low deposition temperature. As revealed by the x-ray diffraction analyses, crystallite sizes of the films were between 11.7 and 25.2 nm. The crystallite size of as-deposited GaN film increased from 11.7 to 12.1 and 14.4 nm when the annealing duration increased from 30 min to 2 h (800 °C). For all films, the average optical transmission was ∼85% in the visible (VIS) and near infrared spectrum. The refractive indices of AlN and AlxGa1−xN were lower compared to GaN thin films. The refractive index of as-deposited films decreased from 2.33 to 2.02 (λ = 550 nm) with the increased Al content x (0 ≤ x ≤ 1), while the extinction coefficients (k) were approximately zero in the VIS spectrum (>400 nm). Postdeposition annealing at 900 °C for 2 h considerably lowered the refractive index value of GaN films (2.33–1.92), indicating a significant phase change. The optical bandgap of as-deposited GaN film was found to be 3.95 eV, and it decreased to 3.90 eV for films annealed at 800 °C for 30 min and 2 h. On the other hand, this value increased to 4.1 eV for GaN films annealed at 900 °C for 2 h. This might be caused by Ga2O3 formation and following phase change. The optical bandgap value of as-deposited AlxGa1−xN films decreased from 5.75 to 5.25 eV when the x values decreased from 1 to 0.68. Furthermore, postdeposition annealing did not affect the bandgap of Al-rich films.