Synchrotron X-ray diffraction, scanning electron microscopy, and transmission electron microscope bright field and high angle annular dark field were employed to investigate the microstructure and precipitates of a Zr-2.5Nb-0.5Cu alloy wire, with potential application as a spacer in the CANDU® reactor design. Results show that three types of microstructure co-exist in the alloy: Widmanstätten structure, α-Zr grains without precipitates and α-Zr grains with precipitates. In the meantime, three types of second phase particles are detected: β-Nb, Zr2Cu and Zr2Fe, which have different distributions within the microstructure. The β-Nb precipitates are observed to be extensively distributed among the α plate boundaries and twin interfaces in the Widmanstätten structure, whereas the Zr2Cu and Zr2Fe precipitates are only found in the α plate boundaries. The orientation relations of the Zr2Cu precipitates with respect to the α-Zr and β-Nb are found to be (013)Zr2Cu//(0001)α (013)Zr2Cu//(0001)α, [03¯1]Zr2Cu//[1¯100]α and (013)Zr2Cu//(011)β−Nb, [03¯1]Zr2Cu//[2¯1¯1]β−Nb respectively.