In a recent experiment, a high density of much stronger sites for nucleation of hydrides than available otherwise in a Zr-alloy was created by the authors by a synergistic effect of addition of a small quantity of Y to Zr and microstructural modification of the resulting Zr–Y alloy by quenching. These sites, which are essentially nano-sized Zr–Y–O complexes (<5 nm), lead to precipitation of only sub-microscopic hydrides, that are unlikely to embrittle the host matrix. Yttrium has also been used to improve the oxidation resistance of a variety of high temperature alloys and aluminides. In this work, the possibility of achieving the twin benefits of improved resistance to oxidation as well as hydride embrittlement by using Y as an alloying addition in dilute Zr–Nb alloys was explored.