Bismuth magnesium oxide (BMO) thin films were prepared by an unconventional sol-gel method and the films deposited on glass slides were annealed at 60 °C and 120 °C. XRD reveals the single-phase nature of the synthesized material. The morphological characterization of the samples was carried out with SEM and optical characterization was performed with UV-Vis spectroscopy in the wavelength range 300 to 850 nm. The fundamental optical parameters like refractive index, optical conductivity, and extinction coefficient were calculated from the UV-Vis absorption spectra. The Bandgap for both the BMO thin films annealed at 60 °C and 120 °C were obtained as 3.26 eV and 3.29 eV, respectively. Also, this study covered the measurements of the complex dielectric function and depending on this, the interband transition strength, the surface energy loss function (SELF) and the volume energy loss function (VELF) were also obtained. The results obtained in this study are compared with available literature and it was found that parameters like refractive index, extinction coefficient, band gap etc. in our study are better than that reported by other researchers. Graphical abstract Highlights The material is synthesized by an unconventional sol gel technique which is cost effective and easy to fabricate. Obtained optical parameters are better than that reported earlier. Optical properties of the materials indicate suitable applications of the synthesized thin films.