The effects of $Fe_2O_3$ addition on optical and electrical properties of MgO films as a protective layer for AC plasma display panels were investigated. Doped MgO films prepared by the e-beam evaporation have a higher ${gamma}$ (secondary electron emission coefficient) than pure MgO protective layer. Roughness increased with amount of $Fe_2O_3$ up to 100 ppm and then decreased further addition. These results showed that discharge properties and optical properties of MgO protective layers seemed to be closely related with microstructure factors such as roughness. Good optical and electrical properties of ${gamma}$ of 0.120, surface roughness of 14.1 nm and optical transmittance of 94.55% were obtained for the MgO + 100 ppm $Fe_2O_3$ protective layer sintered at $1700^{circ}C$ for 5 hrs.