A variable temperature neutron diffraction study of the novel oxide ion conductor Ba3MoNbO8.5 has been performed between 25 and 600 °C. Nonmonotonic behavior of the cell parameters, bond lengths, and angles are observed indicating a structural rearrangement above 300 °C. The oxygen/vacancy distribution changes as the temperature increases so that the ratio of (Mo/Nb)O4 tetrahedra to (Mo/Nb)O6 octahedra increases upon heating above 300 °C. A strong correlation between the oxide ionic conductivity and the number of (Mo/Nb)O4 tetrahedra within the average structure of Ba3MoNbO8.5 is observed. The increase in the number of (Mo/Nb)O4 tetrahedra upon heating from 300–600 °C most likely offers more low energy transition paths for transport of the O2– ions enhancing the conductivity. The unusual structural rearrangement also results in relaxation of Mo(1)/Nb(1) and Ba(2) away from the mobile oxygen, increasing the ionic conductivity. The second order Jahn–Teller effect most likely further enhances the distortion of the MO4/MO6 polyhedra as distortions created by both electronic and structural effects are mutually supportive.