Silver-doped indium tin oxide thin films were synthesized using sol–gel dip-coating technique. The influence of different silver-dopant contents and annealing temperature on the electrical, optical, structural, and morphological properties of the films were characterized by means of four-point probe, UV–Vis spectroscopy, X-ray diffraction (XRD), field emission scanning electron microscopy (FESEM), and X-ray photoelectron spectroscope (XPS). XRD analysis confirmed the formation of cubic bixbyte structure of In2O3 with silver nanoparticles annealed at 350 °C. XPS analysis showed that divalent tin transformed to tetravalent tin through oxidization, and silver nanoparticles embedded into ITO matrix covered with silver oxide shell, resulting in high quality nanocomposite thin films. The embedment of polyvinylpyrrolidone inhibited the growth of silver nanoparticles and ITO annealed at 350 °C. Delafossite structure of tin-doped AgInO2 was found at higher annealing temperatures. XRD analysis and FESEM micrographs showed that the optimum temperature to prevent the formation of AgInO2 is 350 °C. The embedment of silver particles (5–10 nm) from reduction of silver ion in ITO thin films improved the electrical conductivity and optical transmittance of ITO nanolayers. The lowest stable sheet resistance of 1,952 Ω/Sq for a 321 nm thick and an average optical transmittance of 91.8 % in the visible region with a band gap of 3.43 eV were achieved for silver-doping content of 0.04 M.