Hydrogen-doped indium oxide (In2O3:H) has emerged as a highly transparent and conductive oxide, finding its application in a multitude of optoelectronic devices. Recently, we have reported on an atomic layer deposition (ALD) process to prepare high quality In2O3:H. This process consists of ALD of In2O3:H films at 100 °C, followed by a solid phase crystallization step at 150–200 °C. In this work, we report on a detailed electron microscopy study of this crystallization process which reveals new insights into the crucial aspects for achieving the large grain size and associated excellent properties of the material. The key finding is that the best optoelectronic properties are obtained by preparing the films at the lowest possible temperature prior to post-deposition annealing. Electron microscopy imaging shows that such films are mostly amorphous, but feature a very low density of embedded crystallites. Upon post-deposition annealing, crystallization proceeds merely from isotropic crystal grain growth of these embedded crystallites rather than by the formation of additional crystallites. The relatively high hydrogen content of 4.2 at. % in these films is thought to cause the absence of additional nucleation, thereby rendering the final grain size and optoelectronic properties solely dependent on the density of embedded crystallites. The temperature-dependent grain growth rate has been determined, from which an activation energy of (1.39 ± 0.04) eV has been extracted. Finally, on the basis of the observed crystallization mechanism, a simple model to fully describe the crystallization process has been developed. This model has been validated with a numerical implementation thereof, which accurately predicts the observed temperature-dependent crystallization behaviour.