Hydrogen-induced variations in mechanical behavior of zirconium alloys impose detrimental influence on nuclear fuel cladding integrity. This work reports a disappearance of intrinsic yield drop in a recrystallized zirconium alloy following hydrogen-charging treatment. Microstructure characterizations reveal that the nano-hydrides precipitation, mediated by second phase particles Zr(Fe,Cr)2 acting as hydrogen trapping sites, leads to emission of substantial dislocations in α-matrix grains due to strong strain concentrations, as identified by high-angular resolution EBSD. These mobile dislocations preserved at elevated temperatures can maintain the applied plastic strain and impede rapid dislocation multiplication as well, a conclusion validated by comparative analysis of dislocation densities prior to and near yielding stage. These findings are expected to shed light on the underlying mechanisms governing the interaction between hydrogen and microstructural defects in Zr-based nuclear fuel cladding materials.