Aluminum-doped zinc oxide (AZO) is well known as transparent conducting material for electro-optical devices, but is rarely used as plasmonic material, particularly on the localized surface plasmon resonance (LSPR) behavior of AZO nanostructure and its plasmonic devices. In this study, we systematically investigate the plasmonic behaviors of AZO thin films and patterned AZO nanostructures with various structural dimensions under different annealing treatments. We find that AZO film can possess highly-tunable, metal-like, and low-loss plasmonic property and the LSPR characteristic of AZO nanostructure is observed in the near-infrared (NIR) region under proper annealing conditions. Finally, environmental index sensing is performed to demonstrate the capability of AZO nanostructure for optical sensing application. High index sensitivity of 873 nm per refractive index unit (RIU) variation is obtained in experiment.