A highly supersaturated nanocrystalline Cr–25 wt% Zr alloy has been prepared by mechanical alloying of elemental crystalline powders. High-purity powders of Cr and Zr were milled for up to 20 h. The development of the microstructure was investigated by X-ray diffraction (XRD) and scanning electron microscopy. XRD patterns confirmed complete alloying of the Zr and Cr. The contribution of grain boundaries, the chemical potential of a solute atom induced by dislocations, and the elastic strain energy arising from the different sizes of Cr and Zr atoms have been calculated. The alloy formation is discussed with respect to the thermodynamic conditions of the material. The role of internal strains and stored enthalpies by dislocations on solute atoms is the major mechanical driving force for alloying and this is critically assessed in this article.