The phase stability of nanocrystallites with metastable crystal structures under ambient conditions is usually attributed to their small grain size. It remains a challenging problem to maintain such phase integrity of these nanomaterials when their crystallite sizes become larger. Here we report an experimental-modelling approach to study the roles of nitrogen dopants in the formation and stabilization of cubic ZrO2 nanocrystalline films. Mixed nitrogen and argon ion beam assisted deposition (IBAD) was applied to produce nitrogen-implanted cubic ZrO2 nanocrystallites with grain sizes of 8–13 nm. Upon thermal annealing, the atomic structure of these ZrO2 films was observed to evolve from a cubic phase, to a tetragonal phase and then a monoclinic phase. Our X-ray absorption near edge structure study on the annealed samples together with first-principle modelling revealed the significance of the interstitial nitrogen in the phase stabilization of nitrogen implanted cubic ZrO2 crystallites via the soft mode hardening mechanism.