We present a first principles study on the effect of native point defects in Al:ZnO transparent conductive oxide. Our results indicate that oxygen and zinc vacancies play two completely different roles:the former maintain the electrical properties while worsening the transparency of native Al:ZnO. The latter are strong electron acceptors that can destroy the metal-like conductivity of the system. While the percentage of doping amount is not really relevant, the compensation ratio between Zn vacancies and Al dopants is crucial for the final electrical properties of the system. H impurities always act as electron donors and generally improve the characteristics of the transparent conductor. Finally, we show how the chemistry of the defects affects the color of Al:ZnO samples, in agreement with experimental results. Our results pave the way to defect engineering for the growth of high performance transparent conductive oxides