The interface between ultrathin sputtered lead zirconate titanate (PZT) films and a conductive electrode (indium tin oxide-ITO) is investigated. Structural and compositional changes at the PZT-ITO interface have been examined by surface analysis and depth profiling techniques of glancing angle X-ray diffraction, Rutherford backscattering (RBS), SIMS, Auger electron spectroscopy (AES), and elastic recoil detection analysis (ERDA). Studies indicate significant interdiffusion of lead into the underlying ITO layer and glass substrate with a large amount of residual stress at the interface. Influence of such compositional deviations at the interface is correlated to an observed thickness dependence in the dielectric properties of PZT films.