The variations of dislocation density, character of dislocations, and crystallite size as a function of milling time and post-heat-treating temperature were investigated for 12YWT nanocomposite ODS ferritic steel using X-ray diffraction line profile analysis. The modified Williamson-Hall and the modified Warren-Averbach methods, which are based on the dislocation model of the strain anisotropy, were utilized to characterize the microstructural parameters of the nanocomposite material and the matrix alloy. The presence of nano-oxide particles in the ODS steel caused an initially sharp decrease in the average crystallite size; however, with increasing milling time, the crystallite size of the unreinforced alloy reached the comparable value of that of the reinforced material. The subsequent heat treating on the powders milled for 80 h showed that the presence of Y2O3 dispersoids increased the recrystallization temperature and suppressed the grain growth up to 800 A degrees C in the 12YWT alloy as compared to the matrix alloy which occurred about 700 A degrees C. The results of X-ray diffraction line profile analysis also showed that the contribution of edge components of the dislocations increased at the initial milling stages, while the screw components tended to increase after 40-h milling time.