We observed the formation of oxide precipitates (bcc-In(2)O(3)) in InN nanostructures formed during metal-organic chemical vapor deposition (MOCVD) and/or subsequent postgrowth procedures in H(2) ambient. It was found that InN is extremely unstable in H(2) ambient and the activation energy of N(2) desorption of InN is measured to be similar to 0.28 eV, which is one order of magnitude smaller than that of reported value of InN in vacuum. Instability of InN nanostructures under H(2) ambient together with residual oxidant in the reactor facilitates the formation of indium oxide precipitates in the nanostructure matrix during MOCVD or the oxidation of residual indium at the surface, resulting in indium oxide dots.