The kinetics of phase transformation of colloidal In2O3 nanocrystals (NCs) during their synthesis in solution was explored by a combination of structural and spectroscopic methods, including X-ray diffraction, transmission electron microscopy, and extended X-ray absorption fine structure spectroscopy. Johnson-Mehl-Avrami-Erofeyev-Kholmogorov (JMAEK) and the interface nucleation models were used to analyze the isothermal kinetic data for the phase transformation of NCs in the temperature range of 210-260 degrees C. The results show that NCs are initially stabilized in the metastable corundum (rh-In2O3) phase. The phase transformation occurs via nucleation of cubic bixbyite (bcc-In2O3) phase at the interface between contacting rh-In2O3 NCs, and propagates rapidly throughout the NC volume. The activation energy of the phase transformation was determined from the Arrhenius expression to be 152 +/- 60 kJ/mol. The interface nucleation rate is maximal at the beginning of the phase transformation process, and decreases over the course of the reaction due to a decrease in the concentration of rh-In2O3 NCs in the reaction mixture. In situ high-temperature XRD patterns collected during nonisothermal treatment of In2O3 NCs reveal that phase transformation of smaller NCs occurs at a faster rate and lower temperature, which is associated with their higher packing density and contact formation probability. Because NC surfaces and interfaces play a key role in phase transformation, their control through the synthesis conditions and reaction kinetics is an effective route to manipulate NC structure and properties.