A nanocrystalline ZrNxOy thin film was deposited using hollow cathode discharge ion-plating (HCD-IP). ZrO2 and ZrN phases were detected by X-ray diffraction in the as-deposited film, suggesting phase separation during the growth process. This research performed a transmission electron microscopy (TEM) study on the mechanism of phase-separation and distribution in ZrNxOy thin films and related the phase fraction with the film properties. Since the crystallographic orientations of the ZrO2 and ZrN phases are random, the microstructure of the separated phases is studied with multiple central dark-field (MCDF) technique. The compositional distribution between the separated phases is analyzed with nano-beam energy dispersive X-ray spectroscopy (EDX). The results showed that zirconium oxynitride (ZrNxOy) thin film has a columnar structure with an alternate arrangement of columns of ZrN and ZrO2, indicating that oxygen atoms are inter-columnarly segregated with a lateral diffusion distance lower than 20 nm. (C) 2009 Elsevier B.V. All rights reserved.