Brittle hydrides of plate-shaped morphology are known to embrittle the host zirconium matrix. The embrittlement effect is a strong function of the aspect ratio of hydride plates and their major dimension, as thinner plates behave akin to cracks resulting in stress-concentration around their edges, especially when tensile load is acting normal to the broad face of the plates. The embrittlement of the host matrix is due to loss in load bearing area as a result of cracking of the hydride plates under load and severe localized deformation of the ligaments joining the hydride plates. In this work, mitigation of hydride embrittlement was attempted by exploiting the synergistic effect of yttrium addition to zirconium and micro structural modification of the Zr–Y alloy by quenching. This was expected to enable creation of a very high density of nucleation sites much stronger than those available otherwise and, thus, facilitate precipitation  of much smaller hydrides that do not embrittle the host matrix. The results obtained in the present work on a dilute Zr–Y alloy do support this idea.