Oxide dispersion strengthened (ODS) steels with different contents of zirconium (denoted as 16Cr ODS, 16Cr-0.3Zr ODS and 16Cr-0.6Zr ODS) were fabricated to investigate the effects of Zr on strengthening mechanism of Al-alloyed 16Cr ODS steel. Electron backscatter diffraction (EBSD) results show that the mean grain size of ODS steels could be decreased by Zr addition. Transmission electron microscope (TEM) results indicate that Zr addition could increase the number density but decrease the mean diameter and inter-particle spacing of oxide particles. Furthermore, it is also found that in addition to Y-Al-O nanoparticles, Y-Zr-O oxides with finer size were observed in 16Cr-0.3Zr ODS and 16Cr-0.6Zr ODS steels. These changes in microstructure significantly increase the yield strength (YS) and ultimate tensile strength (UTS) of ODS steels through mechanisms of grain boundary strengthening and dispersion strengthening.