Bismuth-substituted yttrium iron garnet (Bi:YIG, $Bi_{0.5}Y_{2.5}Fe_5O_{12}$) films were deposited with aerosol deposition method and their magnetic and optical properties were investigated as a function of annealing temperature. Since the ceramic films deposited with aerosol deposition method have not a perfect crystal structure due to non-uniform internal stress occurred by mechanical collision during their deposition, the post annealing could be a key process to release its internal stress and to improve its micro structure for optimizing the magnetic and magneto-optic properties of films. The crystallinity of Bi: YIG film was improved with increase of annealing temperature, and the saturation magnetization increased up to 87 emu/cc at $800^{circ}C$. The Faraday rotation increased up to $1.4deg/{mu}m$ by annealing at $700^{circ}C$ around the wavelength of $0.5{mu}m$. The optical transmittance of the Bi:YIG film was also improved in visible region.