The manipulation of matter at the nanoscale enables the generation of properties in a material that would otherwise be challenging or impossible to realize in the bulk state. Here, we demonstrate growth of zirconia nano-islands using atomic layer deposition on different substrate terminations. Transmission electron microscopy and Raman measurements indicate that the nano-islands consist of nano-crystallites of the cubic-crystalline phase, which results in a higher dielectric constant (κ ∼ 35) than the amorphous phase case (κ ∼ 20). X-ray photoelectron spectroscopy measurements show that a deep quantum well is formed in the Al2O3/ZrO2/Al2O3 system, which is substantially different to that in the bulk state of zirconia and is more favorable for memory application. Finally, a memory device with a ZrO2 nano-island charge-trapping layer is fabricated, and a wide memory window of 4.5 V is obtained at a low programming voltage of 5 V due to the large dielectric constant of the islands in addition to excellent endurance and retention characteristics.