Through-thickness microstructure development and residual stress evolution were explored in a part-pilgered Zircaloy-4 tube. Clear gradients in microstructure and residual stress were experimentally established at different locations. Such locations were considered along the axial length and also across the wall thickness. These were naturally subjected to different von Mises effective strains and were reflected on strain/microstructural gradients. The deformation gradients were also simulated with a three-dimensional elastoplastic finite element model. The model used both isotropic and anisotropic yielding. Though deformation gradients were similar with both yielding criteria, the anisotropic yielding provided a better match with experimental residual stress gradients. © 2017, The Minerals, Metals & Materials Society and ASM International.