The half-Heusler NiZrSn (NZS) alloy is particularly interesting owing to its excellent thermoelectric properties, mechanical strength, and oxidation resistance. However, the experimentally investigated thermal conductivity of half-Heusler NZS alloys shows discrepancies when compared to the theoretical predictions. This study investigates the crystal structure around atomic defects by comparing experimental and theoretical X-ray absorption fine structure (XAFS) spectra of the crystal structure of a half-Heusler NZS alloy. The results of both Zr and Ni K-edge XAFS spectra verified the existence of atomic defects at the vacancy sites distorting the C1b-type crystal structure. We concluded that the distortion of the atoms around the interstitial Ni disorder could be the probable reason for the observed lower thermal conductivity values compared to that predicted theoretically in half-Heusler alloys. Our study makes a significant contribution to the literature because the detailed investigation of the lattice distortion around atomic defects will pave the way to further reduce the thermal conductivity by controlling this distortion.