The increase of the band gap in Zn1‐xMgxO alloys with added Mg facilitates tunable control of the conduction band alignment and the Fermi‐level position in oxide‐heterostructures. However, the maximal conductivity achievable by doping decreases considerably at higher Mg compositions, which limits practical application as a wide‐gap transparent conductive oxide. In this work, first‐principles calculations and material synthesis and characterization are combined to show that the leading cause of the conductivity decrease is the increased formation of acceptor‐like compensating intrinsic defects, such as zinc vacancies (VZn), which reduce the free electron concentration and decrease the mobility through ionized impurity scattering. Following the expectation that non‐equilibrium deposition techniques should create a more random distribution of oppositely charged dopants and defects compared to the thermodynamic limit, the paring between dopant GaZn and intrinsic defects VZn is studied as a means to reduce the ionized impurity scattering. Indeed, the post‐deposition annealing of Ga‐doped Zn0.7Mg0.3O films grown by pulsed laser deposition increases the mobility by 50% resulting in a conductivity as high as σ = 475 S cm‐1.