This work focuses on the structural, optical, and morphological modifications in As 20 Ag 10 Te 10 Se 60 quaternary thin films that are ∼800 nm thick upon thermal annealing at different temperatures. The structure is analyzed by Xray diffraction that reveals the phase transformation (amorphous to crystalline) due to annealing. This material's phase transition enables it to be used in memory device applications. The increase in particle size is confirmed by field emission scanning electron microscopy of the surface. The increase in particle size signifies the agglomeration occurs at higher annealing temperatures. The optical transmittance shows a red shift toward a lower photon energy as recorded by the ultraviolet−visible spectrometer. The optical bandgap of the films decreases (1.84 to 1.72 eV), whereas the refractive index increases as calculated from the Swanepoel method. The decrease in the bandgap is attributed to the increases in the localized states. The amorphous to crystalline transition results in a significant increase in the third-order nonlinear susceptibility (from 4.524 × 10 −11 to 14.146 × 10 −11 esu). The nonlinear refractive index is found to increase from 5.385 × 10 −10 to 14.786 × 10 −10 esu upon annealing. The static and high-frequency dielectric constant increases with the increase in oscillator and dispersion energy. The observed changes are explained on the basis of phase transformation and the density of defect states. The enhanced value of the nonlinear refractive index with a reduced optical electronegativity and carrier concentration with annealing is useful for nonlinear optical devices.