Possessing the ability to tune the work function and band gap of transparent conducting oxides (TCOs) is widely sought after, as it allows for improved band alignment in electronic and optoelectronic applications, enhancing overall device performance. Out of the many TCOs, Al-doped zinc oxide (AZO) has received considerable interest for electrode application due to its low electrical resistivity, high optical transparency in the visible regime, and room-temperature fabrication capability. In this study, we report on the effects of post fabrication air-annealing on the work function and band alignment of AZO deposited at room temperature by DC-magnetron sputtering. AZO films were air-annealed at temperatures varying from 25 degrees C (as-deposited) to 600 degrees C. The Fermi energy levels, work function values, surface chemistry, and optical band gaps of the AZO films were investigated via Xray photoelectron spectroscopy (XPS) and UV-Vis spectroscopy. An increase of the work function from similar to 5.53 eV to similar to 6.05 eV is observed to take place over an increase of annealing temperatures from 25 degrees C (as-deposited) to 600 degrees C, determined to be the result of a decrease in carrier concentration through the promoted extinction of oxygen vacancies. Via XPS analysis, the increased extinction of oxygen vacancies was confirmed due to a notable shift from an oxygen-deficient state to an oxygen-sufficient state in the high resolution O 1s peaks, for which the activation energy was found to be 33.3 meV. Over the course of increasing annealing temperatures, the optical band gap saw a shift from similar to 3.55 eV to similar to 3.37 eV, following the Burstein-Moss phenomenon due to a decrease in carrier concentration, further verifying an increase in oxygen vacancy extinction. The reported results confirm that work function tuning of AZO films can be achieved through simple post-fabrication air-annealing.