Nodular corrosion characteristics of recrystallized Zircaloy-4 were investigated in static autoclave tests at 500°C and 10.3 MPa. The roles of annealing temperature, cooling rate after beta-treating at 1050°C, cold work, and surface treatment in corrosion tests were correlated with the results of microstructural characterization by scanning and transmission electron microscopies. A good correlation was obtained between average size of intermetallic precipitates and weight gain, in contrast to nodule coverage and nodule number density. These results could be best explained by the hypothesis that nodules nucleate in local regions that are depleted of Fe and Cr alloying elements. Some observations were inconsistent with the premise that nodules nucleate on or near intermetallic precipitates. Nodular corrosion characteristics and microstructures of commercial Zircaloy-2 cladding of fuel and gadolinia rods, obtained from several BWRs after burnup of 11-30 MWd/kgU, were also examined. Partial amorphization of intermetallic precipitates in BWR