Zr-2.5Nb pressure tube alloy with uniform oxide layer was shown to undergo extensive nodular corrosion when exposed to a gas mixture of CO₂ and O₂ at high temperature in presence of hydrochloric acid. Substantial hydrogen pick-up with radial hydrides at the nodule base was observed. A bare metal surface, however, did not undergo nodular corrosion. A thicker initial oxide was less prone to nodular corrosion. A global mechanism was proposed which postulates that a site with localized damage (chemical/mechanical) of the uniform oxide layer, yet surrounded by the remaining oxide, tends to oxidize at an enhanced rate resulting in nodules