Analysis of X-ray pair distribution function data has provided a detailed picture of the local structure of amorphous Zr(OH)(4) and its thermal decomposition into ZrO2. In the untreated phase, the Zr atoms tend to be coordinated by six or seven oxygen atoms. The Zr centered polyhedra connect to each other primarily by sharing edges, but also with a significant amount of corner sharing, to form two-dimensional sheets in which the Zr are connected to an average of about five other Zr. This local structure is related to the structure of monoclinic ZrO2 and can be derived from it by removing certain Zr neighbors to form sheets and reduce the corner to edge sharing ratio. The maximum correlation length in Zr(OH)(4) is about 12 angstrom. Heating up to 125 degrees C results in significant water loss but does not alter the network of Zr and bridging 0 atoms. Additional water loss caused by heating to 250 degrees C triggers a reorganization into a new type of amorphous phase with a three-dimensional network and a greater number of Zr-Zr neighbors. Further heating to 330 degrees C causes crystallization into a mixture of tetragonal and monoclinic ZrO2, with the minor tetragonal phase having a smaller average domain size. The tetragonal component vanishes by 900 degrees C.