In most of the binary uranium alloy systems, different metastable phases can be retained at room temperature depending on the rate of cooling of the gamma phase. On the other hand, in U-rich U–Zr system, the gamma phase transforms into either martensitic a or Widmanstatten a depending on the cooling rate. It has not been ascertained so far if any intermediate phase is involved prior to the martensitic transformation in U-rich U–Zr system and, therefore, nature of the intermediate phase remains undetermined. Present investigation shows the existence of an intermediate phase prior to the final martensitic transformation. Although the equilibrium beta phase is known to undergo martensitic transformation, quenching from the   g phase appears to suppress the b phase formation. In fact the present experimental evidence suggests that the most likely intermediate phase is the monoclinic distortion of alpha phase (a²), and not the beta, when gamma phase of U–2 wt%Zr alloy is quenched rapidly.