The electrical properties of a modulated pulsed power (MPP) magnetron discharge were experimentally and theoretically studied in case of reactive sputtering of metallic zirconium target in argon/oxygen mixtures. The high-power pulsing was assisted by pre-ionization provided by a low-power direct current (DC) magnetron discharge filling the pulse-off period. The ranges of stable discharge operation parameters (applied voltage and oxygen flow rate) were determined for pulse-on time of 3 ms and pulse-off time 100–1000 ms. The maximum stable peak power density was 2.1 kW cm−2. Strong dependence of the MPP discharge current waveforms on the pulse-off time was found, indicating the important role of the pre-ionizing DC discharge. In presence of oxygen, discharge peak current was observed with characteristic width up to 1.5 ms, followed by non-reactive-like plateau region. For theoretical treatment of the observed discharge current behavior, we modified the well-known Berg model of reactive sputtering by introducing the terms required for adequate description of time-dependent poisoning and sputtering processes. The reactive ion implantation term was also transformed to account for the process saturation at high ion current densities. Calculation results from the modified Berg model demonstrated good agreement between our experimental observations of discharge current evolution and target poisoning dynamics in the timescale of milliseconds.