The molecular dynamics of vibrationally-excited ozone isolated in Ar and Xe matrices at 12 K are investigated using classical trajectory methods. Oxygen atom diffusion in these matrices are computed using a classical variational transition-state theory which employs a new Markov walk/damped trajectory procedure to effect convergence. The matrix model consists of a face-centered-cubic (fcc) crystal with 125 unit cells (666 atoms) in a cubic (5 X 5 X 5) arrangement. Ozone, or the oxygen atom, is held interstitially within the innermost unit cell of the crystal. The system potential is written as the sum of a lattice potential, a lattice-ozone or oxygen atom interaction, and a gas-phase potential for ozone. The first two potentials are assumed to have pairwise form, while the ozone molecular potential is the one developed by Murrell and Farantos [Mol. Phys. 1977, 34, 1185]. The oxygen atom/Xe pair potentials are computed at the Hartree-Fock and Moller-Plesset second-order perturbation level of theory for the singlet and triplet states using two different pseudopotentials for the xenon core. Vibrational relaxation is observed to be mode specific with the bending mode dominating the rate of energy transfer to the lattice. The rates over the first 0. 1-0.2 ps are characterized by near-linear, first-order decay. The energy-transfer rates are found to be significantly faster in Ar than in Xe matrices. Thermal diffusion rates of oxygen atoms in fcc Xe crystals are computed for a range of possible O/Xe Lennard-Jones (12,6) interaction potentials suggested by the pseudopotential calculations. In all cases, diffusion is found to be extremely slow with an activation energy greater than 3.3 kcal/mol. Quantum tunneling is shown to make a negligibly small contribution to these rates. The corresponding diffusion rates in Ar are even slower. Comparison of the results with measured diffusion coefficients indicates that almost all of the experimentally observed diffusion is occurring along lattice defects, grain boundaries, vacancies, and other lattice imperfections.