The structural, chemical, surface morphology, and optoelectronic characteristics of Al-doped SnO2 (ATO) films are investigated and a comprehensive analysis of the obtained results is presented. All films are shown to have a polycrystalline tetragonal rutile structure by X-ray diffraction (XRD) measurements, and the single-phase nature of the structure is proved by detailed X-ray photoelectron spectroscopy (XPS) investigations. Two mechanisms of Al incorporation into the SnO2 lattice were evident by XRD and XPS measurements. Comprehensive XPS, XRD, and Hall effect investigations showed a clear relation between the charge carrier concentration, crystallite size, and the concentration of oxygen vacancy defects. Through a comprehensive analysis of the photoluminescence (PL) measurements, we determined the positions of various defect states within the bandgap. Using a thorough analysis of the optical absorption measurements, we have successfully demonstrated the presence of four direct optical transitions with energies ranging from 3.84 to 5.10 eV, and by considering the Moss–Burstein effect and the Urbach tailing phenomenon, it was shown that the first transition energy (E1) corresponds to the direct optical transition across the Γ3+−Γ1+ forbidden energy gap. The other three transitions are ascribed to electronic transitions from the valence band states Γ5− and Γ5+ to different defect states within the bandgap.