The oxidation states of silver oxide (AgxO) films were investigated to discuss the origin of Schottky barrier formed at an In–Ga–Zn–O (IGZO) and AgxO hetero interface. The oxidation states of AgxO films were varied by an oxygen flow ratio (R[O2]) during RF magnetron sputtering. The current–voltage characteristics of IGZO Schottky diodes (SDs) with Ag electrode showed Ohmic behavior. In contrast, by increasing the R[O2], the reverse current dramatically decreased, and exhibited good diode properties with a rectification ratio, a Schottky barrier height, and an ideality factor of 1.9 × 108, 0.96 eV, and 1.03, respectively.The bulk-sensitive X-ray photoelectron spectroscopy with CrKα (5415 eV) X-ray source analysis revealed that the effective work function of AgxO was mainly influenced by the density of states (DOSs) of the valence band. As the R[O2] increased during AgxO deposition, the shallow DOSs decreased, while the deep DOSs increased in the valence band maximum, due to the decrease of the Ag component and the increase of the Ag2O component in the AgxO films. As a result, the effective work function of the AgxO dramatically changed by approximately 1 eV deeper than pure Ag. In contrast, the shallow DOSs strongly affected the electrical conductivity and played a key role for metallic conduction of the film, while it increased reverse current of the SDs. It was thus suggested that the high Schottky barrier height of 0.96 eV in IGZO SDs originated from the dominated deep DOSs of AgxO.