This article addresses simultaneous improvements in the photovoltaic performance and operational stability of organic photovoltaic devices (OPVs) in the inverted configuration when nanostructured ZnO characterized by a lower density of localized surface atomic energy states is employed as an electron transport layer. Two sets of devices with the configuration ITO/ZnO/P3HT:PCBM/MoO3/Ag are employed in the present study. A difference in the density of localized energy states in the band gap of ZnO was produced by altering the crystallinity by annealing the ZnO at two temperatures, viz. 160 and 240 °C. The devices are characterized by scanning electron microscopy, X-ray diffractometry, current–voltage (I–V) measurements as functions of temperature and illumination intensity, incident photon to current conversion efficiency (IPCE) spectroscopy, and charge extraction by linearly increasing photovoltage (CELIV) spectroscopy. The devices fabricated using the ZnO nanostructures annealed at 240 °C have shown remarkably higher power conversion efficiency (PCE) and IPCE values than the other device. From I–V measured as a function of photon flux and temperature we show that the device with higher PCE is characterized by a lower depth of localized energy states by a factor of two than the other device. The implications of the lower trap depth was also evaluated using CELIV and the corresponding charge mobility obtained differed by a factor of three between the two sets of devices. The device with lower equilibrium concentration at the interface has three fold higher charge mobility and 40% enhanced photoconversion efficiency. The stability of the devices was evaluated with and without encapsulation under simulated sunlight (AM 1.5) following the ISOS-D-1 (shelf) and the ISOS-L-1 protocols; the device with higher PCE also showed higher operational stability. The findings in this study are expected to provide new directions in fabricating organic–inorganic heterojunction devices with high performance and stability.