Several Fe - O samples containing different fractions of dispersed oxides were processed by mechanical milling followed by consolidating rolling. The samples were annealed at 1000degreesC and then compressed to strains of 0.35, 1.2, and 1.9 at an ambient temperature. Dispersed oxides with size of about 20 run were homogeneously distributed throughout the ferrite matrix and their volume fractions varied from about 0.3% to 2.0%. To study the annealing softening mechanisms, the cold-worked specimens were annealed for an hour at 700degreesC and 800degreesC. The fine dispersion of oxide particles was very effective to suppress any softening processes. Primary recrytallization fully developed in the samples with volume fraction of dispersed oxides of about 0.3%. Increase in the fraction of dispersed oxides resulted in decrease of the fraction recrystallized. In the samples containing 2.0 vol.% of dispersed oxides, only recovery was the annealing softening process irrespective of the preceding cold strain. The critical volume fraction of dispersed particles for development of the primary recrystallization is considered to range from 0.5 to 2.0%.