Synchrotron-based core level and angle resolved photoemission spectroscopy was used to study the formation of ytterbium (Yb) oxide at the graphene–SiC substrate interface. Oxide formation at the interface was accomplished in two steps, first intercalation of Yb into the interface region and then oxygen exposure while heating the sample at 260 °C to oxidize the Yb. After these processes, core level results revealed the formation of Yb oxide at the interface. The Yb 4f spectrum showed upon oxidation a clear valence change from Yb2+ to Yb3+. After oxidation the spectrum was dominated by emission from oxide related Yb3+ states and only a small contribution from silicide Yb2+ states remained. In addition, the very similar changes observed in the oxide related components identified in the Si 2p and Yb 4f spectra after oxidation and after subsequent heating suggested formation of a Si-Yb-O silicate at the interface. The electronic band structure of graphene around the K¯-point was upon Yb intercalation found to transform from a single π band to two π bands. After Yb oxide formation, an additional third π band was found to appear. These π bands showed different locations of the Dirac point (ED), i.e., two upper bands with ED around 0.4 eV and a lower band with ED at about 1.5 eV below the Fermi level. The appearance of three π-bands is attributed to a mixture of areas with Yb oxide and Yb silicide at the interface.