The effects of annealing temperature on the electrical characteristics of Li–N co-doped ZnO (ZnO:(Li,N)) thin film transistors (TFTs) were studied in this paper. ZnO:(Li,N) active layers were deposited on SiO2/p-type Si substrates by radio frequency magnetron sputtering. After thermal annealing treatment, ZnO:(Li,N) films exhibited an average transparency over 85% in the visible region. In addition, the microstructure and morphology of the ZnO:(Li,N) films were investigated by X-ray diffraction and scanning electron microscopy, confirming the polycrystalline nature and the grain size. The mechanism on the electrical characteristics transition induced by the annealing temperature was also proposed. Finally, thin film transistors incorporating sputtered ZnO:(Li,N) as the active layers exhibited the superior performance; specifically, a high saturation mobility of 33.6 cm2/V s, a suitable threshold voltage of −6 V and a large on/off current ratio of 1.1 × 108.