The effect of nanocrystalline grain size and bimodal distribution of nano- and microcrystalline grain sizes on the oxidation resistance and mechanical properties of Fe-based alloys has been investigated. Nanocrystalline and bimodal Fe-10Cr-5Ni-2Zr alloy pellets, prepared by mechanical alloying route, have been compared with conventional microcrystalline stainless steel alloys having 10 and 20 wt% Cr. Zr addition has been shown to improve the grain size stability at high temperatures. A significant improvement in the ductility of bimodal alloys with respect to nanocrystalline alloys was seen presumably due to the presence of the microcrystalline grains in the matrix. The high temperature oxidation of nanocrystalline and bimodal alloys at 550 A degrees C shows superior oxidation resistance over microcrystalline alloy of similar composition (Fe-10Cr-5Ni) and comparable to that of microcrystalline alloy having twice as much Cr (Fe-20Cr-5Ni). Secondary Ion Mass Spectroscopy depth profiling confirms the hypothesis that nanostructure facilitates the enrichment of Cr at the oxide metal interface resulting in the formation of a passive oxide layer.