Ge-rich ZrO2 films, fabricated by confocal RF magnetron sputtering of pure Ge and ZrO2 targets in Ar plasma, were studied by multi-angle laser ellipsometry, Raman scattering, Auger electron spectroscopy, Fourier transform infrared spectroscopy, and X-ray diffraction for varied deposition conditions and annealing treatments. It was found that as-deposited films are homogeneous for all Ge contents, thermal treatment stimulated a phase separation and a formation of crystalline Ge and ZrO2. The “start point” of this process is in the range of 640–700 °C depending on the Ge content. The higher the Ge content, the lower is the temperature necessary for phase separation, nucleation of Ge nanoclusters, and crystallization. Along with this, the crystallization temperature of the tetragonal ZrO2 exceeds that of the Ge phase, which results in the formation of Ge crystallites in an amorphous ZrO2 matrix. The mechanism of phase separation is discussed in detail.