A water-immersion laser-scanning annealing (WILSA) method was developed for the heat treatment of a deposited polycrystalline Au film on a glass. The material characterization using X-ray diffraction, field-emission scanning electron microscopy, and electron backscatter diffraction shows improved crystallinity with a more uniform crystallographic orientation of (111) and the grain growth of the annealed Au film. Additionally, the optical constants of the Au film before and after annealing were characterized by spectroscopic ellipsometry in the visible to near-infrared (NIR) regime, and the corresponding optical densities (ODs) were measured by transmittance spectroscopy. Our results show that the extinction coefficient and the OD of the annealed film are significantly reduced, particularly in the NIR regime. This is because the grain growth caused by the annealing reduces the density of grain boundaries, leading to the decrease of the loss of free electrons' scattering at grain boundaries. Hence, the damping effect of the surface plasmon is reduced. Additionally, the integrity of the WILSA-treated thin film is kept intact without pinholes, usually produced by the conventional thermal annealing. Based on the improved optical property of the WILSA-treated Au film, two performances of an insulator−metal−insulator (IMI) layered structure of biosensors are theoretically analyzed. Numerical results show that the propagation length of a long-range surface plasmon polariton along an IMI structure with an annealed Au film is significantly increased, compared to an unannealed film, particular in the NIR region. For the other application of using an IMI sensor to detect the shift of the surface-plasmon-resonance dip in the total internal reflection spectrum for the measurement of a change of the medium's refractive index, the sensitivity is also profoundly improved by the WILSA method. It is worth mentioning that the optimal heating conditions (laser wavelength, fluence, exposure time, and scanning step) depend on the thickness of the Au film. Our study provides a postprocess of WILSA to improve the optical properties of a deposited polycrystalline Au film for raising the sensitivity of the related biosensors.