Fe-15 wt.% ZrO2 nanocomposite powder was synthesized via mechanical milling with an aim to study the morphology of the powder particles and refinement of the oxide and Fe crystallites during milling. Detailed microstructural and microchemical investigations were carried out in order to optimize the milling condition and to highlight the advantages for the choice of ZrO2. A homogeneous mixture was confirmed by X-ray mapping and ZrO2 dispersoids were observed to retain crystallinity even after 100 h of milling. It was also observed that both Fe and ZrO2 crystallites refine to very fine nanocrystalline (nc) sizes after such milling. The result has 2-fold significance: (a) Yttria, which is a standard dispersoid in oxide dispersion strengthened (ODS) steels, usually amorphised under similar conditions, which is detrimental to its structural stability and (b) nanocrystallites of Fe have useful magnetic properties. Modified Williamson-Hall technique (mod. W-H) was employed to measure the size and dislocation density of the matrix ferrite phase. Nanoindentation technique was used to. evaluate the nanohardness of the milled powder as a function of milling duration. (C) 2015 Elsevier B.V. All rights reserved.