The phase stability of Li₇La₃Zr₂O₁₂ (LLZ) was investigated using high temperature X-ray diffraction (HT-XRD). An Al-free tetragonal LLZ phase transformed into a non-quenchable cubic phase around 650 °C. The phase transformation process between the tetragonal phase and the new cubic phase showed perfect reversibility. The thermal analysis showed a pair of endothermic and exothermic peaks around 640 °C that is in good agreement with the phase transformation process observed in the HT-XRD study. The non-quenchable high temperature cubic phase showed high ionic conductivity with extraordinarily low activation energy (0.117 eV). The tetragonal phase showed another phase transformation to a low temperature (LT) cubic phase around 150–200 °C in air by absorbing CO₂ into the structure. The preferred temperature for the CO₂ absorption process was around 200 °C and the absorbed CO₂ was extracted once the temperature reached 450 °C or above resulting in the phase transformation back to the tetragonal phase. On the other hand the high temperature (HT) cubic phase which shows high ionic conductivity was stabilized by Al substitution. A Li-poor LLZ containing impurity phases such as La₂Zr₂O₇ and La₂O₃ effectively reacted with γ-Al₂O₃ resulting in the formation of a pure Al-stabilized cubic LLZ, while the stoichiometric LLZ took a much longer time to complete the Al-substitution. The result suggested that the formation of Li vacancies is the primary step in the formation of the Al-stabilized cubic phase.