The critical stress and strain for initiation of dynamic recrystallisation (DRX) in Zr-1%Nb alloy have been determined by employing two different approaches. The work hardening rate versus stress curve and the natural logarithm of work hardening rate versus strain were used for this analysis. To evaluate the onset of DRX in Zr-1%Nb alloy, the hot deformation behaviour of this alloy has been studied in the temperature range of 770–850 °C and strain rates range 10−2 to 1 s−1. To reduce friction during the tests, the ends of samples were coated with graphite powder and a thin layer of mica placed between the surface of samples and the anvils. Nevertheless, the flow stress values were corrected to eliminate the effects of friction and adiabatic heating during the tests. The outcomes of work hardening rate analysis showed that the first method (work hardening rate versus stress) is the best method to determine the critical conditions of initiation of DRX. All in all, for Zr-1%Nb alloy, the dynamic recrystallisation was found to start when the normalised stress and strain reach the values of 0.91 and 0.87, respectively. Furthermore, the transmission electron microscopy (TEM) analysis showed that the DRX took place through a continuous mechanism, and optical microstructures confirmed that at low temperature and high strain rate the flow curves could be explained by localised deformation and shear band formation.