The initial stages of zirconium oxide formation on Zircaloy after water (H₂O) and oxygen (O₂) exposures have been investigated in situ using photoelectron spectroscopy and X-ray-absorption spectroscopy. The reactivity of the zirconium alloy with O₂ at room temperature is about 1000 times higher than for H₂O. Up to 100 L (1 L = 1 Langmuir unit = 1 ∙ 10^-6 mbar ∙ s) H₂O exposure, the reactivity of the zirconium alloy at 450°C is comparable to the room temperature reaction. At higher H₂O exposure, a sharp increase in the reaction rate for the high-temperature oxidation is observed. From the energy position of the Zr 3d photo emission line and their oxygen-induced chemical shifts, one can directly follow the formation of the oxide films. Two different substoichiometric oxides were found during reaction with water. Suboxide (1) is located at the zirconium/zirconium-oxide interface. Subsequently, a Suboxide (2) is concluded from the chemical shift of the zirconium photoelectrons. After an oxide thickness of 2 nm, the stoichiometric ZrO₂ phase is not yet developed.