The origin of the deep subgap states in amorphous indium gallium zinc oxide (a-IGZO), whether intrinsic to the amorphous structure or not, has serious implications for the development of p-type transparent amorphous oxide semiconductors. We report that the deep subgap feature in a-IGZO originates from local variations in the oxygen coordination and not from oxygen vacancies. This is shown by the positive correlation between oxygen composition and subgap intensity as observed with X-ray photoelectron spectroscopy. We also demonstrate that the subgap feature is not intrinsic to the amorphous phase because the deep subgap feature can be removed by low-temperature annealing in a reducing environment. Atomistic calculations of a-IGZO reveal that the subgap state originates from certain oxygen environments associated with the disorder. Specifically, the subgap states originate from oxygen environments with a lower coordination number and/or a larger metal-oxygen separation.