The Stylus 1020 is equipped with an Olympus aspherical glass 7x zoom lens, 6.6 - 46.2mm (37 - 260mm equivalent in 35mm photography), 9 elements in 6 groups with 4 aspherical lenses. The maximum aperture is F3.5 (W) / F5.3 (T). The lens retracts into the camera when powered down and is protected by an automatic lens barrier.

The TTL contrast-detect auto focus system covers from 27.6" (0.7m) to Infinity in normal mode, from 3.9" (0.1m) to infinity in Macro mode, and from 0.79" - 27.6" (2cm-70cm) in Super Macro mode.

The built in speedlight features Auto, Red-eye reduction, Fill and Forced Off modes. Olympus claims an effective range of 0.66ft (0.2m) – 15.6ft (4.8m) at wide angle or 1.2ft (0.6m) – 10.2ft (3.1m) at telephoto (using ISO 800). As the ISO or sensitivity in decreased, the flash range will fall of.

There is no optical viewfinder, you frame, review and perform menu operations on this large 2.7-inch HyperCrystal II LCD monitor with approx. 230,000 pixels of resolution. It delivers a high contrast image with 5 steps of brightness adjustment.

Controls on the back: Top is the zoom lens control which also functions as the magnified playback and index mode buttons when in play mode. The Mode Dial has positions for Favorites (blue start), Playback, Auto, Program, SCeNe, Guide and Movie. The MENU button calls up and dismisses the menu system, while the play button enters playback mode (also sets DPOF settings when in playback mode). The 4-way selector is used to navigate menu screens and select images for playback. In record mode the "Up" button changes exposure compensation, "Left" enables the macro/super macro focus modes, "Right" changes the flash mode and "Down" button enables the self-timer. The DISPlay button selects the amount of overlay information on the LCD image, and displays the menu guide. The final button turns the Shadow Adjustment mode on and off in record mode, and deletes images in playback.

On the top is the Power button and Shutter Release.

On the side is a combination I/O port that handles USB, A/V output and DC In. An optional AC power adapter can be connected to power the 1020 continuously. The A/V Out cable sends the audio/video to a television set, the video format is selectable for NTSC or PAL standard. Data I/O is Mass Storage compliant USB v2.0 and also PictBridge compatible for direct printing.

Still images and movie clips are stored in the camera's ~15MB of internal memory or on removable xD-Picture Card flash memory cards. Olympus brand xD-Picture Cards are required to use the camera's built-in Panorama feature. 16MB to 2GB xD-Picture cards are now available. The Stylus 1020 is also compatible with MicroSD card when using the included adapter.

Power is supplied by a LI-50B Li-ion battery pack. Olympus claims you can capture up to 260 shots on a single charge. The included AC charger lets you charge one battery while using another. Lithium battery packs can be charged or "topped off" at any time without shortening the service life of the battery.