Sprayed CdO:6% Mg thin films have been grown on preheated glass substrates. The optical properties and dispersion parameters of the films have been studied as a function of heat treatment. The changes in dispersion parameters and Urbach tails were investigated. The optical energy gap Eg decreased with increasing annealing temperature to 450°C that increase the density of localized states and cause an expanding in the Urbach tail and consequently decrease the energy gap from 3.51 eV to 3.45 eV. The single-oscillator parameter has been reported.