Zirconium-2.5wt%Nb alloy, used as a pressure tube material of Pressurized Heavy Water Reactors, possess fine microstructure of elongated α-Zr grains with a grain-boundary network of β-Zr and a strong basal pole texture along the transverse (circumferrential) direction of the tube. Transversely oriented flat tensile specimens, machined from a commercial pressure tube were tested at 650-800°C by both monotonic and strain-rate cycling (2.68 × 10-5 - 5.3 × 10-3 s-1) tests in order to study the elevated temperature deformation of this material. It was observed that the alloy exhibited superplasticity in this temperature range, showing high ductility (elongation upto 900 pet.) and strain-rate sensitivity (m∼0.3-0.85). Microstructural studies of the deformed structure indicated the transformation of the starting α-β lamellar structure into a fine equiaxed grain-structure and the measured activation energies were found to be 123 kJ/mole at the higher end and 211 kJ/mole at the lower end of the test temperatures. Based on these results it appears that the superplastic behavior is controlled by grain-boundary sliding phenomenon accompanied by niobium diffusion along α-β boundaries at the lower end and lattice diffusion of β-zirconium at the higher end of the temperature range used in this investigation.