We report here the stabilization of the cubic phase under ambient conditions in the thin films of zirconia synthesized by electron beam evaporation. The cubic phase stabilization was achieved without the use of chemical stabilizers and/or concurrent ion beam bombardment. Films of two different thicknesses (660 nm and 140 nm) were deposited. While the 660 nm as-deposited films were in the cubic phase, as indicated by X-ray diffraction and Raman spectroscopy, the 140 nm as-deposited films were amorphous and the transformation to the cubic phase was obtained after thermal annealing. Extended X-ray absorption fine structure measurements revealed the existence of oxygen vacancies in the local structure surrounding zirconium for all films. However, the amount of these oxygen vacancies was found to be significantly higher for the amorphous films as compared to that for the films in the cubic phase (660 nm as-deposited and 140 nm annealed films). The stabilization of the cubic phase is attributed to the breaking of the oxygen-zirconium bonds due to the presence of the oxygen vacancies, which results in the suppression of the soft X2- mode of vibration of the oxygen sub-lattice. Our first-principles modeling under the framework of density functional theory shows that the cubic structure with oxygen vacancies is indeed more stable under ambient conditions than its pristine (without vacancies) counterpart due to breaking of the oxygen bonds. The requirement of a critical amount of these vacancies for cubic phase stabilization is discussed.