Li–Al–O thin films synthesized via the reactive magnetron co-sputtering have the potential to act as solid-state electrolytes in micro-batteries. In this paper, the constant RF power (155 W) and variable DC power (20–50 W) were applied to lithium (Li) and aluminum (Al) metal targets, respectively, in Ar/O2 atmosphere to produce films with adequate ionic conductivity. The influence of DC sputtering power on the composition, microstructure, band gap energy, ionic conductivity, and dielectric loss of films were studied in detail. X-ray photoelectron spectroscopy (XPS) showed a shift of the Li 1s peak towards higher binding energy with increasing DC power. X-ray diffraction (XRD) spectra confirmed the amorphous state for all as-deposited films, while the post-annealed films at 950 °C contain the γ-LiAlO2 phase. Field emission scanning electron microscopy (FESEM) and atomic force microscopy (AFM) images revealed that the increasing DC power had a significant impact on the film morphology, enlarging grain size and increasing surface roughness. Energy dispersive X-ray (EDX) spectroscopy showed that increasing the DC power increased the Al content. The optical properties were examined by ultraviolet–visible (UV–vis) spectroscopy, which indicated that increasing the Al content led to a blue shift of the absorption edge and an increase in the band gap energy (5.40–5.68 eV). Increasing the DC power resulted in an improvement of room-temperature conductivity by two orders of magnitude (∼2.85 × 10−9 S cm−1) and a decrease in the activation energy from 0.54 eV to 0.32 eV. These results suggest that composition and microstructure significantly affect the ionic transport in co-sputtered Li–Al–O films.