Two phase Zr-2.5 wt-%Nb is used as pressure tube material in water cooled and moderated reactors. The in service behaviour of tins hcp zirconium based alloy is dependent on strong textures developed during thermomechanical processing. In the present study, the texture evolution during fabrication of this material, using a modified route, was investigated. Texture, evaluated by the orientation distribution function, was correlated to microstructure during various stages of processing. It was observed that a strong orientation fibre parallel to the working direction develops with hot working (extrusion). With subsequent cold working, the texture formed after extrusion alone becomes strengthened. This observation is attributed to the presence of a soft secondary phase (β) at the α phase grain boundary. In contrast to the above, in the case of single phase Zircaloy 4, new components of texture are generated with cold deformation after hot extrusion, as a result of interaction between grains.