The effect of the annealing characteristics of MgO thin film, which is used as a protecting layer and known to play an important role to life time and lower the firing voltage in AC plasma displays, was investigated experimentally. MgO films were deposited on glass substrates by an electron beam evaporation method and annealed at different temperatures with varying heat treatment time. The characteristics of the crystallization and surface morphology of MgO films were changed by various annealing conditions, confirmed with X-ray diffraction method and scanning and transmission electron microscopes (SEM & TEM). With increasing annealing time and higher temperature, the intensity of the X-ray diffraction peak and the crystalline grain size of MgO increases. With the change of crystallinity and the decrease in grain boundary area, it is considered that the characteristics of firing voltage and life time of the plasma display panel can be improved with appropriate annealing process.