Zr-2.5Nb alloy pressure tubes for CANDU(R) reactors are nominally extruded at 815 degrees C, cold-worked about 27%, and stress-relieved at 400 degrees C for 24 h. The resulting structure consists of elongated alpha-Zr grains interspersed with a network of thin beta-Zr filaments. Corrosion tests on unirradiated and preirradiated material have investigated the effects of microstructure and microchemistry on corrosion and hydrogen ingress. In two-phase (alpha-Zr+beta-Zr) structures, the corrosion and hydrogen pickup increases with increasing volume fraction of beta-Zr. Corrosion is highest for single beta-phase material although hydrogen pickup reverts to a minimum value. Tests on alloys with low Nb concentration show that the optimum corrosion resistance occurs at a Nb content of about 0.1 wt% Nb. Thermal aging the metastable two-phase structure reduces corrosion and is consistent with a lower beta-phase volume fraction and a lower concentration of Nb in the alpha-phase. Cold working the as-extruded two-phase structure up to about 80%, prior to stress relieving, reduces the out-reactor corrosion by about a factor of two. However, in-reactor,the benefits of cold work are negligible since there is a suppression of corrosion in irradiated Zr-2.5Nb that dominates all other effects, irradiation results in an increase in dislocation density due to dislocation loop formation and also enhances the progression to an equilibrium alpha-phase composition manifested by the appearance of Nb-rich precipitates. Both of these effects of irradiation on microstructure are associated with improved corrosion properties based on tests of materials with controlled microstructures and microchemistry; Any thermally induced decomposition of the alpha-phase, resulting from the stress-relief heat-treatment, is slowed or even reversed by irradiation, depending on flux and temperature, and is therefore unlikely to have a significant effect on corrosion of irradiated materials. One of the most important factors leading to improved corrosion properties in Zr-2.5Nb pressure tubing seems to be the precipitation of beta-Nb particles and the concomitant reduction of Nb in the matrix of the alpha-Zr grains during irradiation. Apart from any direct effects of cold-working or dislocation loop formation, it is likely that increased dislocation densities will also enhance Nb precipitation.