The magnesium oxide (MgO) protective layer plays an important role in plasma display panels (PDPs). Our previous work demonstrated that the properties of MgO thin film could be improved, which were deposited by Ion-Beam-Assisted Deposition (IBAD). However arc discharge always occurs during the IBAD process. To avoid this problem, Oxygen-Neutral-Beam-Assisted Deposition (NBAD) is used to deposit MgO thin films in this paper. The energy of the oxygen neutral beam was used as the parameter to control the deposition. The experimental results showed that the oxygen neutral beam energy was effective in determining in structural and discharge characteristics. The lowest firing inception voltage, the highest brightness and the highest luminous efficiency were obtained when the MgO thin film was deposited with an oxygen neutral beam energy of 300eV. The surface morphology of MgO thin film was also analyzed using AFM (Atomic Force Microscopy) and SEM (Scanning Electron Microscopy).