A solvent extraction process for the production of nuclear grade Dy2O3 for its applications in advance heavy water reactor (AHWR) from a crude concentrate of rare earths containing Y2O3 similar to 67%, Dy2O3 - 22%, etc. has been developed and tested by bench-scale counter-current operations. The challenging task of separating Dy2O3 from other rare earths with similar chemical properties has been successfully accomplished by adopting a dual cycle solvent extraction scheme based on an organophosphorus extractant 2-ethylhexylphosphonic acid, mono-2-ethylhexyl ester (EHEHPA). Taking the advantage of the extraction order of rare earths with EHEHPA, in the first cycle heavy rare earths including yttrium fractions are separated in the product strip solution, while dysprosium is concentrated in the raffinate solution along with terbium, gadolinium, etc. In the second cycle dysprosium is purified to the extent of >99.5% with respect to other rare earths from the dysprosium concentrate obtained in the raffinate of the first cycle. Effects of process variables such as aqueous acidity, phase ratio, metal concentration in the aqueous feed, scrubbing and stripping acidity etc on separation of yttrium and other heavy rare earths in the first cycle and upgrading the purity of Dy2O3 in the second cycle have been evaluated. Under optimized conditions of process parameters, continuous operations of mixer settler yielded kilogram quantity of nuclear pure Dy2O3 which exceeds the specifications required. The recovery was found to be >98%. The overall process also produces two concentrates as by-products namely yttrium (>93%, 1st cycle) and terbium (>54%, 2nd cycle) as source materials for further upgradation of these elements.