The influence of porosity and densification on optical properties of films on sapphire substrates that were prepared from water colloidal suspensions of small (∼5nm) particles of ceria was investigated. The colloidal ceria films have initially very porous structure (porosity about 50%) and densification starts at about 600°oC accompanied by grain growth. The concurrence of these two processes makes it difficultto interpret the results of the optical spectrophotometry, but the combination of transmittance and reflectance measurements provides enough data to separate these two influences and to calculate the porosity, particlesize and energy band gap separately. XRD, SEM, ellipsometry and mechanical profilometry were used to confirm the results obtained from the specrophotometric measurements. All these methods gave results, which are in good agreement: the change in the porosity from 50% to 15% and the particle size increased from 5 to 65nm in the temperature region from 400 to 1000°oC. An important result of the investigation is the fact that the main optical properties of the coating such as refractive index and band gap energy depend only on the porosity, but not on the grain size. The grain size influences the scattering properties of the coating, which allows the grain size to be estimated from optical measurements.