In this work, the effects of oxygen compensated capping layer (CCL) on the electrical performance and stability of indium‐tin‐zinc‐oxide (ITZO) thin‐film transistors (TFTs) are investigated. Two different channel structures, namely single and dual channels, are tested for the ITZO TFTs. The dual‐channel layer is created by depositing an oxygen CCL on the oxygen uncompensated channel layer (UCL), while the single‐channel layer consists only of the oxygen UCL. It is found that the oxygen CCL is critical for enhancing the electrical properties of dual‐channel ITZO TFT and its stability under different stress modes such as dynamic stress, positive bias temperature stress, and negative bias illumination stress. The dual‐channel ITZO TFT exhibits a saturation field‐effect mobility of 16.69 cm2 V‐1s‐1, a threshold voltage of 6.80 V, and a sub threshold swing of 0.22 V dec‐1. Furthermore, it is revealed that the higher metal‐oxide concentration, and fewer defects in the dual‐channel, which lead to enhanced electrical performance and stability of the device. This work demonstrates the potential of utilizing the oxygen CCL for highly reliable operation of oxide semiconductor TFTs.This article is protected by copyright. All rights reserved.