Hydride formation in a fully recrystallized Zr–2.5%Nb alloy having equiaxed grains of α and β was studied. Primarily the electron back scatter diffraction (EBSD) technique was used for the characterization of the hydrides in conjunction with optical and transmission electron microscopy. Hydrides were found to have preferentially formed along the a/β interfaces. Microtexture measurements showed that the orientation relationship (OR) between a and δ-hydride phase was (0 0 0 1)_α|| (1 1 1)_δ and ½2 [1 1 0]_α|| [1 1 0]_δ. It was shown that the hydrides have higher preference to form along such a/β interfaces which have one of the low index planes of the β phase constituting the interface.