The objective of this study is to investigate the microstructure and effect of annealing to the hardness properties of oxide dispersion strengthened (ODS) Fe-15Cr-0.3Y2O3 alloy. This type of alloy was prepared by mechanical alloying (MA) method followed by compacting and sintering. The microstructure of milled Fe-15Cr-0.3Y2O3 alloy powders and pellet was examined by using field emission scanning electron microscope (FESEM). The milled alloy powders consist of nearly spherical shape of powder particles with average size of 10 μm. For the alloy pellet microstructure, the formations of Y2O3 nanoparticles with average size of 5 nm were observed indicating the dispersion and incorporation of this nano-scale dispersoids into the alloy matrix. Fe-15Cr-0.3Y2O3 alloy pellet was annealed at temperature of 600 °C, 800 °C and 1000 °C, respectively for the Vickers hardness test. The Vickers hardness test was performed by using a micro-Vickers hardness tester with a load of 200 gf. The hardness value (HV) of this alloy pellet started to decrease at temperature of 600 °C indicating the grain growth of this material at high temperature.