Different types of inorganic oxide films composed of a chemical composition gradient single layer were designed, fabricated and characterized. Compositionally graded thin films were created by power-controlled co-sputtering of alumina (Al2O3) and silica (SiO2) at room temperature, allowing the structural design of the film to be tailored at the nanometer scale. Two distinct graded thin films were fabricated: one with a compositionally asymmetric structure consisting of a SiO2-rich bottom interface and a Al2O3-rich top surface, and the other with a compositionally balanced sandwich structure consisting of both the top surface and bottom interface rich in SiO2 and a core rich in Al 2O3 (referred to as SGS for 'sandwich graded structure'). Smoothly graded thin films without interfacial boundaries were verified by Auger electron spectroscopy profiles. X-ray photoelectron spectroscopy demonstrated that the Al2O3/SiO2 graded structures consisted of Si-O and Al-O bonds, as well as Al-O-Si bonds in the transition layer. Neat Al2O3 or SiO2 and their graded ones were all investigated for their mechanical, optical and permeation properties. A SGS thin film presented the best mechanical stability (i.e., about three times improved film toughness of a neat Al2O3 single layer), demonstrating that balanced internal stresses and alternating bonding structures, achieved via a graded structure without interfaces, are crucial for enhancing mechanical stability. Furthermore, neat and graded thin films exhibited the similar level of optical transmittance and the permeation properties for the graded films were well matched with the behaviors of mechanical stability. © 2010 Acta Materialia Inc. Published by Elsevier Ltd. All rights reserved.