A zirconia-based fuel is studied for use of plutonium in light water reactors. Among the relevant properties for a nuclear fuel, efficient retention of fission products is required since the fuel matrix constitutes the first barrier against fission product release. To study the retention of xenon, its stopping power and its diffusion properties within (Er,Y,Pu,Zr)O2 potential inert matrix fuel (IMF) are investigated. Stopping and range of ions in matter (SRIM) calculations were carried out to estimate the average penetration depth of Xe ions as a function of their incident energy and of the material composition. To study its diffusion properties, Xe was implanted into yttria-stabilised zirconia (YSZ) to a depth of around 100 nm from the surface. After successive heat treatments to a maximum temperature of 1773 K, quantitative Xe depth profiles were determined by Rutherford backscattering. No profile modification by diffusion was observed. The behaviour of Xe is investigated at the subnanoscopic level and compared with the results obtained with zirconia samples implanted with Cs or I, as well as with Xe in UO2.