We have synthesized ZnO1-xTex highly mismatched alloys (HMAs) with high, up to x = 0.34, Te content using pulsed laser deposition. We have found that the film composition is strongly dependent on the growth temperature and background pressure during growth. Lowering the growth temperature and/or increasing the background Ar or N-2 pressure increases the Te content in the film. When grown in O-2 atmosphere, however, oxidation of the Te species occurred, resulting in much less Te incorporation in the O sublattice. While a lower substrate temperature is needed for the incorporation of more Te in the ZnO1-xTex film, the crystallinity of the film degrades at low growth temperature. X-ray photoemission, soft x-ray absorption, and x-ray emission measurements reveal that the observed drastic narrowing of the optical bandgap with increasing Te content is primarily due to the modification of the valence band. The experimentally observed evolution of the optical properties of ZnO1-xTex HMAs from dilute to mid-composition range (x > 0.3) is analyzed within the framework of a modified band anticrossing model with composition dependent coupling parameters describing the anticrossing interaction between the valence band of the matrix and Te localized states. Electrically, we found that adding Te in ZnO increases the film resistivity. When doped with N, a drastic drop in n from mid-10(19) to 10(15) cm(-3) is observed for ZnO1-xTex with similar to 2%-4% of Te. These electrical behaviors can be understood as the effect of the upward shift of the valence band, which favors the formation of native as well as N acceptors.