Oxide dispersion strengthened ferritic steels (so-called nanostructured ferritic alloys, NFAs), which are candidate structural materials in next generation nuclear power plant, have attracted much attention during recent years. In this work, iron oxide as oxygen carrier and titanium, yttrium hydrides were together mechanically milled with Fe-14Cr-3W gas-atomized powder. The thermal stability and recrystallization behaviour of the as-milled ferritic powder were studied by means of metallography, SEM, TEM and microhardness test. After ball milling for 48h, complete solid solution of bcc-Fe was formed in the as-milled powder. The thermal analysis results show that dispersed oxides with an average diameter of 5nm precipitate from the supersaturated matrix at about 850 °C. During annealing at temperatures from 800 to 1000 °C, a large number of equiaxed grains as fine as few hundreds of microns were found embedding in the matrix; the recrystallized grains stay quite stable and show minor dependence on annealing temperature and time. After being heated to 1200 °C for extended time, abnormal grain growth took place and resulted in bimodal grained structure. The effect of secondary particles on the thermal stability and recrystallization behavior of the ferritic steel was also discussed.