Highly ordered and hydrophobic zinc oxide thin films have been synthesized by dc magnetron sputtering on the glass substrates at room temperature (RT). We have determined the influence of deposition parameters on the optical and other physical properties of the films, and the correlation between their microstructural and optical properties. Films have preferred (002) orientation, an average crystallite size ≤26 nm, and rms surface roughness ≤14 nm. The water contact angle of 120° exceeds previous measurements by over 10°–20°. Dispersion of the refractive index is analyzed in terms of the Wemple-DiDomenical single-oscillator model, and the third-order nonlinear optical parameters are calculated using the Tichy and Ticha relation. Refractive indices of 1.9686 at 540 nm are near the bulk value of 2.0041. Produced at RT, these highly ordered films may be promising candidates for compact optoelectronic devices.