The efficacy of 50 keV Ar+-ion irradiation toward the interfacial and stoichiometric engineering of strained Al-doped ZnO (AZO)/TiO2 heterostructure is systematically investigated using a variety of experimental techniques, notably by cross-sectional transmission electron microscopy. Glancing-angle X-ray diffraction evidences the release of in-plane compressive stress from the as-grown AZO/TiO2 bilayer structure at a critical fluence of 1 × 1016 ions/cm2, and we discuss in the light of microcracks and voids formation combined with the dewetting phenomenon. Ion irradiation also leads to an improvement of stoichiometry in both top AZO and underneath amorphous TiO2 layers, as manifested by depth-dependent energy dispersive X-ray spectroscopy owing to the large diffusion of oxygen toward the AZO/TiO2 interfacial region through the AZO defect sites. Such ion beam induced self-healing in stoichiometry of AZO/TiO2 heterostructure has been attributed to a conjunction of sputtering and diffusion phenomena involving the constituent elements (Zn, Ti, and O). Further increase in ion fluence up to 5 × 1016 ions/cm2 causes a complete deterioration of the heterostructure with the formation of a graded layer via intermixing of these elements, followed by the evolution of voids. © 2018 Author(s).