The need for providing S/TEM evidence to clarify the mechanisms of nano-scale precipitate formation was the motivation of this investigation. In this study, an Fe–14Cr–0.4Ti alloy was ball-milled with different amounts of Y 2 O 3 content up to 10wt.%, and then annealed at temperatures up to 1100°C. Micron-size Y 2 O 3 particles were substituted for the nano-size counterpart to elucidate the mechanism of oxide precipitate formation. The S/TEM studies revealed that the microstructure of the alloy with 10wt.% yttria contained amorphous undissolved Y 2 O 3 after ball milling, while a small part of the initial oxide particles were dissolved into the solid solution. Consequently, when the amount of yttria was reduced to 1wt.%, the amorphous phase of the yttria vanished and the whole content of Y 2 O 3 was dissolved into the BCC solid solution. Defect analysis of precipitates on the annealed samples via S/TEM and micro-hardness studies revealed that the use of micron-size primary oxide particles can produce nano-size precipitates, stable up to temperatures as high as 1100°C, and uniformly distributed throughout the microstructure. This study indicates that the use of high energy ball milling along with micron-size primary oxide particles can lead to nanostructured ferritic ODS alloys without the use of nano-size primary oxide additions.