An oxide dispersion strengthened (ODS) ferritic steel with nanometric grain size has been produced by low-energy mechanical alloying (MA) of steel powder (Fe-14Cr-1W-0.4Ti) mixed with Y₂O₃ particles (0.3 wt %) and successive hot extrusion (HE). The material exhibits superior mechanical properties with respect to the unreinforced steel up to 400 °C; then such differences tend to progressively decrease and at 700 °C yield stress (YS) and ultimate tensile strength (UTS) values are very close. The microstructure and mechanical behaviour have been compared with those of ODS steels prepared by the most common process, high-energy MA, consolidation through hot isostatic pressing (HIP) or hot extrusion (HE), annealing around 1100 °C for 1–2 h. The main strengthening mechanisms have been examined and discussed to explain the different behaviour. In addition, heat treatments in the range 1050–1150 °C were carried out and a microstructural evolution with a relevant hardness decrease has been observed. TEM observations evidenced defect recovery and partial grain coarsening owing to the not perfectly homogeneous distribution of oxide particles.