Abstract: We present an investigation of the microstructure changes in V2O3 as it goes through its inherent structural phase transition. Using V2O3 films with a well-defined crystal structure deposited by reactive magnetron sputtering on r-plane Al2O3 substrates, we study the phase coexistence region and its impact on the surface roughness of the films and the magnetic properties of overlying Ni magnetic layers in V2O3/Ni hybrid magnetic heterostructures. The simultaneous presence of two phases in V2O3 during its structural phase transition was identified with high resolution x-ray diffraction and led to an increase in surface roughness observed using x-ray reflectivity. The roughness reaches its maximum at the midpoint of the transition. In V2O3/Ni hybrid heterostructures, we find a concomitant increase in the coercivity of the magnetic layer correlated with the increased roughness of the V2O3 surface. The chemical homogeneity of the V2O3 is confirmed through transmission electron microscopy analysis. High-angle annular dark field imaging and electron energy loss spectroscopy reveal an atomically flat interface between Al2O3 and V2O3, as well as a sharp interface between V2O3 and Ni.