The phase transition behavior and oriented aggregation (OA) during colloidal synthesis of In(OH) 3 nanocrystals in water are investigated by TEM, SEM, Xray diffraction, and density functional theory (DFT) calculations. Besides the cubic In(OH) 3 phase, also orthorhombic InOOH is formed in a precipitation route using indium acetate as the In 3+ source. Well-developed nano-and microcuboids are observed that consist solely of In(OH) 3 . In contrast, the InOOH phase remains semicrystalline even for long reaction (refluxing) times. The irregular growth of the InOOH phase is explained by proton transfers from hydroxyl groups to oxygen ions within the InOOH lattice that lead to OH disorder and lattice strain. DFT calculations of the surface energies of ideal and water-saturated low-index InOOH and In(OH) 3 surfaces predict that the In(OH) 3 phase becomes energetically more favorable than InOOH above a critical crystallite size. This explains why InOOH is formed before the In(OH) 3 phase, which is an unusual pathway for a hydrothermal process. Once InOOH has transformed to In(OH) 3 by incorporation of water, the crystallites can grow without restriction due to the disappearance of OH-disorder-induced strain. Finally, for the In(OH) 3 cuboids a three-step formation process is suggested: In the first step, one-dimensional OA under formation of nanorods occurs. In the second step, parallel bundles are formed from the nanorods. In the third step these bundles merge into cuboids by three-dimensional OA.