The creep behaviour of Zircaloy-4 at 973 K displays a transition at an applied stress of σT ≈ 25 MPa. In particular, only at stresses above this level does the loading strain exceed one elastic deflection, the primary creep strain vary systematically with stress or the strain rate at high strain approach a power law dependence. At stresses ⩽ 25 MPa, steady state is not achieved even at strains of ~ 0.5. The present paper describes observations of the microstructures produced by creep. It is found that the average dislocation density p can be described by the empirical equation. σ = σ0 + 0.9 Gb√ρ, where σ0 = 10MPa. The dislocation is dominated by 13a〈1120〉 defects, which are most easily mobile on prismatic {0110} planes, though evidence of the operation of basal slip and of the climb of 13a〈1120〉dislocations out of their prismatic planes is also presented. At all stresses above σT, well-developed subgrains are observed whose average size is inversely proportional to stress. At σT, the subgrain size is equal to the grain size of as-received material (~9 μm), though grain growth occurs during creep testing. A reduced power-law for the steady-state creep rate above σT is proposed ϵ ∝ (σ — σT)3, or, in terms of dislocation density ϵ ∝ (ρ-ρ0)32. The value of ρ0is ~ 8 × 10−12m−2, which is suggested to represent the minimum dislocation density which is able to achieve pure dislocation strain, and which corresponds to the density at σT. At stresses below σT, the dislocation population is insufficient to allow the general grain shape change required by von Mises criterion. Only the more favourable slip systems on average are operative at all stresses above σ0. Observations of the microstructure at applied stresses above σT are compatible with steady state creep being recovery controlled in that regime. At lower stress, some further deformation mechanism is required to act in conjunction with dislocation glide in order to achieve the observed strain while maintaining material continuity at grain boundaries. Observations of grain boundary structure suggest that this further mechanism involves long range grain boundary diffusion. The latter allows the movement of grain boundary dislocations, which in general will also cause migration and grain growth. Further, this is consistent firstly with the absence of steady state at low stresses, since the diffusion creep rate decreases as the grain size increases, and secondly with the equality of the subgrain and initial grain sizes at σT, since all the matrix dislocation accommodation processes must then involve grain boundary diffusion.