We have investigated the effects of oxygen annealing on the transport properties and surface microstructures of epitaxial La0.8Ba0.2MnO3 (LBMO) films deposited on SrTiO3 substrate at different oxygen pressures using the pulsed laser deposition technique. The thickness dependence of the transport properties was strongly affected by the oxygen pressure during the deposition and the oxygen annealing temperature. Oxygen stoichiometry, in addition to the substrate-induced strain, was found to be a very important factor in controlling the physical properties of low-doped LBMO. Oxygen annealing seemed to induce strain and the strain accommodated in the films was relaxed by forming a secondary phase in an. ordered rod-like shape or in particulate form.