A garnet, composition of Tb-0.2 Er-1 Y-1(.8) Fe-5 O-12, based nanostructure thin films were prepared by a sol-gel method for a magneto-optical isolator. The films were deposited on a quartz substrate and crystallised at 900 degrees C under different annealing environments (air, oxygen and argon). Fe2+ concentration-dependent, microstructural, optical and magnetic properties were investigated systematically. This study shows that Fe2+ ions are dominant in the air-annealed film with an atomic percentage of 77.63%, which results in the expansion of the unit cell. In addition, an excess of Fe2+ ions results in much higher optical absorption, remanent magnetisation and saturation magnetisation, caused by the migration of oxygen vacancies due to the reduction of Fe3+ to Fe2+ Conversely, annealing in oxygen and argon gases suppresses the formation of oxygen vacancies, hence improves the optical and magnetic properties of the films. Low saturation magnetisation, combined with low optical absorption, is highly desirable in magneto-optical applications.