The microstructure characterization by X-ray line profile analysis is possible for determination of dislocation density, micro-strain within grains due to dislocation and average coherent domain size (sub- grain) within the grain. This study presents the X-ray diffraction peaks shape analysis and their broadening with different thermal treatments in Zr-2.5% Nb pressure tube material. The peak shape is analysed using Fourier transformation and information about coherent domain size, micro-strain and dislocation density could be obtained from the Fourier coefficients of the peak. Analysis of broadening of the peaks by integral breadth method also gives the coherent domain size, dislocation density and micro-strain present in the material . The results from the X-ray techniques are comparable to those obtained from direct observation of transmission electron microscopy. The measured yield strength increases with dislocation density. An empirical relationship is obtained for the yield strength from the dislocation density of the material. The measured strength is in agreement with the one calculated from dislocation density.