In–Ga–Zn–O (IGZO) sputtering in an Ar, O2, and H2 atmosphere followed by annealing represents an effective method for defect reduction of the resulting films. The carrier density of Ar+O2+H2-sputtered IGZO films increases with increasing H2 amount during sputtering; however, we found that the increased carrier density was markedly decreased by annealing even at 150 °C. The Ar+O2+H2-sputtered IGZO was used as the active channel in thin-film transistors (TFTs), which led to markedly improved electrical properties after annealing at 150 °C, compared with those obtained using conventional Ar+O2-sputtered films. The proposed method is very promising for low-temperature-processed oxide TFTs.