Indium tin oxide (ITO) thin films have been deposited on substrates by the thermal evaporation method, followed by annealing in air. Post annealing effects on the composition and quality of ITO thin films were characterized by electron energy loss spectroscopy (EELS), X-ray photoelectron spectroscopy (XPS) and Auger electron spectroscopy (AES). Spectroscopic and optical measurements showed that the low transparency of an as-deposited ITO film was mainly caused by diffusing species which probably consisted of reduced metallic indium particles and defects in the film formed during the preparation. EELS results revealed that these metallic indium particles could be removed by an annealing process leading to uniformly transparent conducting film. This work demonstrates that EELS is a sensitive method to diagnose the presence of the metallic indium in ITO films.