The photosensitive, nominally undoped nanocrystalline diamond (NCD) films were grown on insulating substrates at a relatively low temperature below 600 °C. The NCD films were exposed to the hydrogen plasma and then briefly to the oxide plasma. This treatment significantly reduced the surface conductivity and enhanced the bulk photosensitivity. The broad optical spectral range (200–2000 nm) photocurrent and optical absorption spectra were measured by the dual‐beam photoconductivity (DBP), Fourier‐transform photocurrent spectroscopy (FTPS) in amplitude modulated step scan mode, optical transmittance and reflectance and photothermal deflection spectroscopy (PDS). The photoionization cross section spectrum of our NCD films is dominated by the non‐diamond phase with the photo‐ionization threshold energy at about 1 eV. At 350 °C the thermal annealing increased the concentration of defects related to the non‐diamond phase and deteriorated the UV photosensitivity. The significant increase of the optical absorption was observed after annealing at 500 °C. The hydrogenation can reduce to some extend the defects created by the thermal annealing. (© 2008 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)