Zinc oxide (ZnO) thin films were intentionally co-doped with group III elements (gallium) in order to investigate and understand the effects of co-doping on the morphological, electrical and optical properties of gallium-doped ZnO (GZO) films. The co-doped films were grown on MgAl2O4 spinel substrates using a low-temperature solution-phase method known as hydrothermal synthesis. Gallium with indium co-doped ZnO (GIZO) films displayed a dramatic improvement in surface morphology as compared with the Ga-doped ZnO (GZO) films due to the compensation effect of gallium and indium doping which reduced the lattice strain. The 0.0033M gallium with 3.3 × 10−4M indium co-doped film exhibited an electron concentration of 3.14 × 1020 cm−3 and resistivity of 7.4 × 10−4 Ω cm which were both enhancements of 1.5 times over the GZO film. These films were comparable to the films fabricated by more expensive and complicated vapour-phase methods. The figure of merit for this film was determined to be 1.63 × 10−2 sq/Ω which was very close to the indium tin oxide conducting films currently used commercially. Finally, the GIZO film was hydrothermally grown on a p-GaN film to form an n-ZnO/p-GaN heterojunction light-emitting diode (LED). This LED showed diode I–V characteristics and exhibited strong cool-white light emission which signified the prospect of using GIZO as an effective and low-cost n-type layer in LEDs.