Hydrogenated nanocrystalline silicon carbide (nc-SiC:H) thin films were prepared by reactive magnetron sputtering. Deposition was achieved in a plasma of argon (Ar) and an hydrogen (H2) gas mixture with various H2 dilution percentages (10–80% H2) at a fixed substrate temperature of 500 °C. In order to describe the local bonding and the relative proportion of the different complexes formed during growth, the films were investigated by means of Fourier Transform Infrared absorption and Raman spectroscopy. Other structural features were analyzed by AFM measurements, electron diffraction and high resolution transmission electron microscopy observations. Optical and electrical properties of the films were also characterized. This study shows that hydrogen dilution plays an important role on the microstructure of the films as well as on their properties. The highest refractive index was obtained for a 60% ratio of hydrogen in the plasma and the highest dark conductivity found was 2.03 × 10−4 Ω−1 cm−1. A close relationship between the Si-H bond content and the conductivity is confirmed.