Oxide dispersion strengthening ferritic steels are fascinating materials for future high temperature energy production technologies. Mechanical milling with the aim of a fine dispersion of oxides in the metal matrix becomes the main process for the production of ODS steels. The mixed powder which is composed of iron, chromium and yttria (Fe-9Cr-15%Y2O3) was mechanically milled for a maximum period of 100 h. Size and structure evolution of Y2O3 and the microstructure changes of the mixed powder during mechanical milling and subsequent annealing were studied. The powder is fractured and welded with rotation and vibration of container during mechanical milling. The results show that the particle size and the grain size decrease with increasing milling time. Nanocrystalline of Y2O3 is gradually formed by severe plastic deformation. It can be explained that the long-range order structure of Y2O3 is damaged by mechanical milling. The formation processes of nanocrystalline in ordered oxides may follow the sequence: ordered phase -> disordered phase (loss of long-range order) -> fine-grained (nanocrystalline) phase. Growth of nanocrystalline Y2O3 occurs at about 891 K during subsequent annealing and the nanostructure of Y2O3 after mechanical milling and annealing was observed by TEM and HRTEM. Crown Copyright (C) 2011 Published by Elsevier B.V. All rights reserved.