Nano-crystalline GaN (nc-GaN) and hydrogenated nc-GaN (nc-GaN:H) thin films and thin film transistors (TFT) prepared by a reactive sputtering method have been studied. Hydrogen incorporation in nc-GaN film induces localized states at mid-gap energy. Thermal annealing at 400 degrees C and 600 degrees C creates mid-gap states which is detectable by electron spin resonance. Further thermal annealing treatment at 800 degrees C reduces the deep states in nc-GaN and nc-GaN:H. Photoluminescence spectra of the nc-GaN film have two broad peaks at 2.4 eV and 3.2 eV. The source-drain current voltage characteristics of the nc-GaN TFT is demonstrated for the first time. The obtained field effect mobility is 10(-4) cm(2)/V.s. Thermal annealing at 800 degrees C improves the field effect mobility to 10(-2) cm(2)/V.s.