The effect of low‐energy ion bombardment on the structure and properties of zirconia films deposited by reactive ion‐beam process is investigated. Bombardment of 100‐eV Ar+during film growth is shown to induce a substantial relaxation of the residual stress as a result of structural modification by the increased mobility of adatoms. Concurrently, the oxygen gettering capability, or film stoichiometry, is improved by the enhanced diffusion of oxygen on substrate surface. The structural change by thermal annealing, up to 600 °C, demonstrates that fine‐grained (200–400 A˚) cubic zirconia can be stabilized down to room temperature without alloying stabilizers. The impingement of low‐energy Ar+during film growth results in an as‐deposited film microstructure which promotes the growth of the cubic‐phase crystallites upon post‐deposition annealing as well as the texturing of film plane into (111) orientation. The refractive index and optical transmission of the zirconia films are shown to be dependent predominantly upon the oxygen content in the film and less sensitive to the improved atomic packing due to the low‐energy Ar+bombardment.