The reactivity of a ceria-rich Ce0.85Zr0.15O2 solid solution toward the thermochemical water splitting process (TWS) was studied over repeated H2/H2O redox cycles. The structural and surface modifications after treatment at high temperature under air or N2 atmospheres were characterized by high-resolution transmission electron microscopy (HRTEM), X-ray diffraction (XRD), Raman spectroscopy, X-ray photoelectron spectroscopy (XPS), and positron annihilation lifetime spectroscopy (PALS). Samples treated under nitrogen resulted more active due to phase segregation with formation of a zirconyl oxynitride phase in catalytic amount. Insertion of N3- into the structure contributes to an increase in the numbers of oxygen vacancies that preferably arrange in large clusters, and to the stabilization of Ce3+ centers on the surface. In comparison, treatment under air resulted in a different arrangement of defects with less Ce3+ and smaller and more numerous vacancy clusters. This affects charge transfer and H-coupling processes, which play an important role in boosting the rate of H2 production. The behavior is found to be only slightly dependent on the starting ceria-zirconia composition, and it is related to the development of a similar surface heterostructure configuration, characterized by the presence of at least a ceria-rich solid solution and a (cerium-doped) zirconyl oxynitride phase, which is supposed to act as a promoter for TWS reaction. The above findings confirm the importance of a multiphase structure in the design of ceria-zirconia oxides for water splitting reaction and allow a step forward to find an optimal composition. Moreover, the results indicate that doping with nitrogen might be a novel approach for the design of robust, thermally resistant, and redox active materials.