The effect of oxygen and argon partial pressures (PO2, PAr) in a Zr vacuum arc on plasma ion current density Jp, arc voltage Varc, deposition rate vd, and selected coating properties was determined. A d.c. arc current of Iarc=100A was initiated between a Zr cathode and a grounded anode. Cathode spots produced a plasma jet, which entered a 1/8 torus macroparticle (MP) filter. The plasma was guided by a d.c. magnetic field through an aperture to a glass substrate or a flat disk probe, mounted on a rotatable holder. Jp was measured with the probe, negatively biased to Vb=−60V. Coating thickness was measured using a profilometer, and coating properties were investigated using optical microscopy, energy dispersive X-ray spectroscopy (EDS), X-ray photoelectron spectroscopy (XPS), X-ray diffraction (XRD), nano-indentation and optical analysis.The discharge electrical characteristics and the coating deposition rate were found to be significantly influenced by PO2 and PAr. Jp and vd increased with PAr until a maximum at PAr=0.27Pa and decreased with PO2. Varc decreased with both PAr and PO2. The changes in Jp, Varc, and vd, with PAr were larger at larger PO2. The Jp, Varc, and vd dependencies suggest that addition of Argon increased the Zr ion emission from the cathode, possibly because Ar ion bombardment reduced Zr surface oxidation and improved plasma conductivity.Zirconium Oxide (ZrO2) coatings were transparent and had colored interference rings. Well adhered, MP-free ZrO2 coatings were deposited with PO2≥1.07Pa. Coatings deposited with PO2=1.07Pa+PAr=0 were amorphous, whereas those deposited with PO2=1.07Pa+PAr=0.27Pa had some degree of a monoclinic phase. Furthermore, the refractive index (n) and extinction coefficient (k) slightly decreased, from 2.22 to 2.17, and from 0.03 to 0.01, respectively and coating hardness (H) and Young's Modulus (E) decreased from ~12.9 to ~11.6GPa and from ~153 to ~136GPa respectively when PAr=0.27Pa was added to a PO2=1.07Pa environment.