Zr-2.5Nb alloy is used as pressure tube material in pressurized heavy water reactors (PHWR). Generally, these pressure tubes are used in the cold drawn condition. Heat treated Zr-2.5Nb alloy pressure tubes are used in reaktor bolshoy moshchnosti kanalniy and FUGEN type of reactors. In recent times, there has been a greater interest toward increasing the life of pressure tubes in advanced reactors. In the present work, fabrication parameters were optimized to manufacture heat treated Zr-2.5Nb alloy tube. A quenching dilatometer study was performed to establish the continuous cooling transus temperature for the alloy used in this study. Heat treatment under controlled condition in a dilatometer was performed to study microstructure at different soaking temperatures and cooling rates. In the dilatometer, during gas quenching, quenching rates were varied from 0.06 to 100C/s to assess the effect of cooling rate on resulting microstructures. Soaking temperature and cooling rates were varied to obtain martensitic microstructure with appropriate volume fractions of primary α. On the basis of the results obtained during controlled heat treatments performed in the quenching dilatometer, 883C was selected as the soaking temperature and water as the quenching medium for the α + β quenching operation for large dimension tubes. The α + β quenched microstructures, consisting of fine martensite phase along with 20%–25% primary α volume fraction, were used for further cold deformation and subsequent aging below the recrystallization temperature. Aging at 540C produced fully recovered and tempered structure consisting of β_Nb of equilibrium composition. Mechanical properties of the finished heat treated pressure tube (aged at 515C/24 h) produced with the present route were similar to the cold work pressure tube. Tube produced with 540C/24 h aging exhibited substantially higher yield strength value at reactor operating temperature (300C). The bulk texture at different stages of fabrication was evaluated. The volume fraction of the primary α phase significantly controls the final texture.