The deposition and properties of sputtered iridium oxide films (SIROFs) using water vapor as a reactive gas constituent are investigated for their potential as high‐charge‐capacity neural stimulation electrodes. Systematic investigation through a series of optical and electrochemical measurements reveals that the incorporation of water vapor as a reactive gas constituent, along with oxygen, alters the reduction–oxidation (redox) state of the plasma as well as its morphology and the electrochemical characteristics, including the cathodal charge‐storage capacity (CSCc) and charge‐injection capacity (CIC), of the SIROF. An apparent optimal O2:H2O gas ratio of 1:3 produced SIROF with a CSCc of 182.0 mC cm−2 μm−1 (median, Q1 = 172.5, Q3 = 193.4, n = 15) and a CIC of 3.57 mC cm−2 (median, Q1 = 2.97, Q3 = 4.58, n = 12) for 300‐nm‐thick films. These values are higher than those obtained with SIROFs deposited using no water vapor by a factor of 2.3 and 1.7 for the CSCc and CIC, respectively. Additionally, the SIROF showed minimal changes in electrochemical characteristics over 109 pulses of constant current stimulation and showed no indication of cytotoxicity toward primary cortical neurons in a cell viability assay. These results warrant investigation of the chronic recording and stimulation capabilities of the SIROF for implantable microelectrode arrays.