In this work, aluminum doped zinc oxide (AZO) and hydrogenated aluminum doped zinc oxide (HAZO) thin films were deposited on polyethylene terephthalate (PET) substrates at room temperature by DC magnetron sputtering. Hydrogenation improved the crystallinity and reduced surface roughness of the AZO thin films. The hydrogenated AZO films revealed improved electrical and optical properties comparing with the AZO films prepared under the same deposition condition: the resistivity decreased from 0.18 Ω cm to 3.0×10⁻³ Ω cm, which was mostly due to the increase of the carrier concentration from 1.5×10¹⁹ cm⁻³ to 2.3×10²⁰ cm⁻³. The average transmittance in the visible range increased from 82.0% to 84.5%. This hydrogenated process may provide an easily realized method to fabricate high quality AZO films on flexible substrates at room temperature.