Epitaxial ZnO thin films and nanorods were grown on c-sapphire substrate by reactive sputtering of Zn in Ar-O2 atmosphere at substrate temperatures ranging from near room temperature to 700 °C. Scanning electron microscopy showed that with increase in substrate temperature, the morphology transformed from columnar films to vertically aligned ZnO nanorods. High resolution x-ray diffraction revealed improvement in crystalline and epitaxial quality with increase in substrate temperature, along with the decrease of edge dislocation density from 5 × 1012 cm−2 to 8 × 1010 cm−2. The films grown near room temperature showed large hydrostatic strain (∼6 × 10−3) and compressive intrinsic biaxial stress (-0.8 GPa), which decreased substantially with increase in substrate temperature, due to the desorption of excess oxygen and reduction in edge dislocation density. Above the substrate temperature of 500 °C, the intrinsic biaxial stress reversed from compressive to mildly tensile in the case of nanorods, due to the intrinsic tensile stress, originating from crystallite coalescence. Raman measurements correlate well with the changes in biaxial stress and confirm the improvements in crystallinity and epitaxial quality of nanorods grown at higher temperatures. Room temperature photoluminescence of the ZnO films showed weak near-band-edge emission, which enhanced drastically in the case of nanorods due to their superior microstructure and epitaxial quality.