The fabrication of oxide-dispersion-strengthened (ODS) steels is a multi-stage process involving powder ball milling, degassing and consolidation by hot isostatic pressing. Y is introduced by mechanical alloying (MA) with either Y2O3 or Fe2Y so a high density of Y-Ti-O-based oxide nanoparticles is formed. The evolution of ∼2 nm oxide nanoparticles and larger >5 nm grain boundary oxides has been studied at each step of the processing. The nanoparticle dispersions produced in material MA with Fe2Y were comparable to those produced by alloying with Y 2O3. Hence the majority of oxygen which forms the nanoparticles must be incorporated from the atmosphere during MA, rather than being introduced via the alloying additions. During mechanical alloying, a high density of subnanometer particles are formed (2.5 ± 0.5 × 10 24 m-3). The oxygen content of the nanoparticles decreases slightly on annealing, and then the composition of the nanoparticles remains constant throughout subsequent processing stages. The nanoparticle size increases during processing up to ∼2 nm radius, while the number density decreases to 4 ± 0.5 × 1023 m-3. Grain boundary oxides (>5 nm) have a Ti-Cr-O-rich shell, and contain no Y before consolidation, but have similar core composition to the matrix nanoparticles after consolidation. The formation of the larger grain boundary oxides is shown to take place during the degassing and consolidation stages, and this occurs at the expense of the nanoparticles in the matrix. This work provides a mechanistic understanding of the importance of controlling the oxygen content in the powder during MA, and the resulting impact on the formation of the ODS microstructure. © 2012 Acta Materialia Inc. Published by Elsevier Ltd. All rights reserved.