Irradiation-induced dislocations significantly affect the mechanical properties of zirconium alloys, altering slip and influencing creep and growth. Thus, the quantitative characterization of irradiation defects as a function of fluence, cold work, and/or thermal treatments is important for models that attempt to predict their impact on properties. Whole-pattern diffraction line-profile analysis (DLPA) is a well-established modern tool for microstructure characterization based on first-principle physical models for dislocation density measurements in plastically deformed materials. However, applying these DLPA methods directly to irradiated materials yields higher than expected dislocation density values compared with historical transmission electron microscopy (TEM) measurements and past line-broadening analysis studies calibrated to TEM observations. In an effort to understand these differences, a new microstructural model was developed for DLPA to specifically address dislocation structures consisting of elliptical - and -component loops. To compare the refined DLPA method with TEM measurements, high-resolution neutron diffraction patterns on nonirradiated and irradiated Zr-2.5Nb samples were collected with the Neutron Powder Diffractometer instrument at the Los Alamos Neutron Science Center and were evaluated. High-resolution TEM measurements were performed at the Reactor Materials Testing Laboratory, Queen’s University, for comparison with the DLPA results. The capabilities and inherent uncertainties of both the refined DLPA and TEM methods are compared and discussed in detail. We show that the differences between the density values provided by DLPA and TEM are inherent to the methods and can be reconciled with the interpretation of the data.