Zinc oxide has attracted attention because of its unique properties that can be modified by doping. In this paper, we investigate the effects of oxygen addition to argon plasma during the sputtering of vanadium and aluminum co-doped zinc oxides. We find that reactive sputtering with oxygen is effective at reducing defects that degrade electrical conductivity and optical transmittance. Further, the effect of oxygen is enhanced when both aluminum and vanadium are co-doped in zinc oxide, resulting in compensation of the defects. Under an optimum condition, an electrical resistivity of 1.2 mΩcm and a 78% of transmittance were achieved.