The characteristics of InOx Ny alloy films prepared via thermal oxidation of InN epitaxial films with In‐ or N‐polarities grown on nearly lattice‐matched, yttria‐stabilized zirconia (YSZ) substrates are investigated. The InN films were oxidized to InOx Ny with a gradual change in O/N composition by annealing in air. Structural analysis revealed that the temperature for phase transition from wurtzite structure depends on the polarity of InN, and N‐polar InOx Ny films can retain their wurtzite structure even at higher temperatures compared with the case of In‐polar films. Furthermore, changes in the valence band structure and optical characteristics of the InOx Ny alloys take place via thermal oxidation. These results indicate that InOx Ny grown via thermal oxidation of N‐polar InN on YSZ can be considered as an alloy semiconductor for optoelectronic devices. (© 2014 WILEY‐VCH Verlag GmbH & Co. KGaA, Weinheim)