Abstract Zr-Nb alloys are known to perform better in corrosion and hydrogen pick-up than other Zr alloys but the mechanism by which this happens is not well understood. Atomistic simulations using density functional theory of both tetragonal and monoclinic ZrO2 were performed, with intrinsic defects and Nb dopants. The overall defect populations with respect to oxygen partial pressure were calculated and presented in the form of Brouwer diagrams. Nb is found to favour 5 + in monoclinic ZrO2 at all partial pressures, but can exist in oxidation states ranging from 5 + to 3 + in the tetragonal phase. Nb5+ is charge balanced by Zr vacancies in both phases, suggesting that contrary to previous assumptions, Nb does not act as an n-type dopant in the oxide layer. Clusters containing oxygen vacancies were considered, Nb2+ was shown to exist in the tetragonal phase with a binding energy of 2.4 eV. This supports the proposed mechanism whereby low oxidation state Nb ions (2 + or 3+) charge balance the build-up of positive space-charge in the oxide layer, increasing oxygen vacancy and electron mobility, leading to near-parabolic corrosion kinetics and a reduced hydrogen pick-up. Previous experimental work has shown that tetragonal ZrO2 transforms to the monoclinic phase during transition, and that during transition a sharp drop in the instantaneous hydrogen pick-up fraction occurs. The oxidation of lower charge state Nb defects to Nb5+ during this phase change, and the consequent temporary n-doping of the oxide layer, is proposed as an explanation for the drop in hydrogen pick-up during transition.