This paper describes the degradation of sputtered aluminium-doped zinc oxide (ZnO:Al) layers which were exposed to damp heat (85°C/85% relative humidity). The ZnO:Al samples were characterized by electrical, compositional and optical measurements before, during and after damp heat exposure. Hall measurements showed that the carrier concentration stayed constant, while the mobility decreased and the overall resistivity thus increased. This mobility decrease can be explained by the enhancement of the potential barriers at the grain boundaries because of the occurrence of additional electron-trapping sites. X-ray diffraction (XRD) and optical measurements demonstrated that the crystal structure and transmission in the range 300 –1100nm did not change, thereby confirming that the bulk structure stayed constant. Depth profiling showed that the increase of the potential barriers was caused by the diffusion of H2O/OH- through the grain boundaries, leading to adsorption of these species or to the formation of Zn(OH)2 or similar species. Depth profiling also revealed the presence of carbon, chloride and sulphide in the top layer, which indicates the possible presence of Zn5(CO3)2(OH)6, Zn5(OH)8Cl2•H2O and Zn4SO4(OH)6•nH2O. Furthermore, white spots appeared on the ZnO:Al surface during damp heat exposure. The spots contained elements, such as silicon and calcium, which might have migrated from the glass and which reacted with species from the environment, including oxygen, carbon and chlorine.