Bandgap energies in wurtzite (WZ) structured Cd _xZn_{1 −x}O alloys are known to decrease with increasing Cd content ( x). Our previous work demonstrated that WZ-Cd _xZn_{1 −x}O alloys with a high Cd content of x ∼ 0.6 and a low gap of 2 eV can be stabilized by oxygen interstitials when grown in an O-rich environment. However, such O-rich WZ-Cd _xZn_{1 −x}O alloys have poor electrical properties due to compensating native defects. In this work, we synthesized pure WZ phase Cd _xZn_{1 −x}O thin films with different Cd contents by magnetron sputtering in an oxygen-rich environment. Changes in structural, electrical, and optical properties of these O-rich wurtzite Cd _xZn_{1 −x}O after rapid thermal annealing were investigated. While alloys with a low Cd composition of 0.2 can maintain a pure wurtzite structure up to 500 °C, phase separation occurs at a lower annealing temperature of ∼400 °C for Cd-rich ( x = 0.6) films. Isochronal and isothermal annealing studies reveal the kinetics of native defects in these alloys. Highly mobile hydrogen interstitial donor defects, oxygen interstitials, and more stable cation vacancies outdiffuse sequentially as the annealing temperature increases from <300 to >400 °C. By exploiting the difference in the energy barrier between acceptor defects removal and phase separation, a pure wurtzite phase alloy with a low bandgap of 2 eV and decent electrical properties was realized by annealing O-rich WZ-Cd_0.6Zn_0.4O at 300 °C with an extended annealing duration of >100 s. These results demonstrate a practical way to obtain low-gap oxide semiconductors with strong optical absorption and controllable electrical conductivities.