In this investigation, the carrier concentration gradient between channel and contact region is achieved to improve the Thin film Transistors (TFT) performance by employing annealing at 350 °C in forming gas (N2 + 5% H2). The contact region is covered with Mo metal and the channel region is only exposed to forming gas to facilitate the diffusion controlled reaction. The TFT using a-IGZO active layer is fabricated in ambient of Ar:O2 in ratio 60:40 and the conductivity of the order of 10−3 S/cm is measured for as-deposited sample. The electrical conductivity of an annealed sample is of the order of 102 S/cm. The device performance is determined by measuring merit factors of TFT. The saturation mobility of magnitude 18.5 cm2V−1s−1 has been determined for W/L (20/10) device at 15 V drain bias. The extrapolated field effect mobility for a device with channel width (W) 10 μm is 19.3 cm2V−1s−1. The on/off current ratio is 109 and threshold voltage is in the range between 2 and 3 V. The role of annealing on the electronic property of a-IGZO is carried out using X-ray photoelectron spectroscopy (XPS). The valance band cut-off has been approximately shifted to higher binding energy by 1eV relative to as-deposited sample.