Polycrystalline CdTe thin films were prepared by close-spaced sublimation (CCS) and were annealed in different condition. The thin films were characterized by scanning electron microscopy (SEM), X-ray diffraction (XRD) and X-ray photoelectron spectroscopy(XPS). The content distribution and valence state of all elements after annealing were studied. All results show that the as-deposited CdTe thin films are in a cubic phase and have the preferred orientation in (111) direction. After annealing, the peak intensity of (111), (220), (311) grows and the crystal grains grow up, while the crystal boundary decreases. So the compound probabilities of current carrier decrease, therefore shunt resistance and drain current are improved. From detailed analysis of X-ray photoelectron data, it is proposed that tellurium oxides present and its content reduces with depth increasing and that there are TeCl2O building blocks.