A number of high Tc oxide superconductors have recently been discovered. From the technological point of view, many studies have been devoted to the production of superconducting wire or tape for applications as high field magnets or cables. The powder-in-tube technique, among various methods to produce an Ag-sheathed superconducting composite, has proved to be a promising route for producing a superconducting oxide wire. Biand Tl-based oxides have been expected as the materials for wire or tape application because the reduction of Jc caused by the weak link at grain boundaries is very small and high Jc values are obtained in the polycrystalline oxides. The superconducting Bi-based oxide has a plate-like structure and cleavage fracture easily takes place along the c plane because the Bi–O bonding in the blocking layer is weak due to polarization of the s electron of the Bi3 ion [1]. Thus, a highly oriented structure has been achieved for Bi-based oxide by a mechanical process or solidification process, leading to the elimination of weak-linked grain boundaries. The highest Jc value of the Bi-based oxide tape reached 5 3 104 A/cm2 at 77 K [2]. On the other hand, Tl-based oxide has strong Tl–O bonding and does not show the cleavage fracture mode. That is, Tl-based oxide does not have a mica-like structure and consists of an equiaxed grain structure. Hence, it is difficult for Tl-based oxide to obtain a highly oriented structure. The Jc of Tl-based oxide tape is significantly enhanced by densification and reaches 1.5 3 104 A/cm2 [3]. If a highly oriented structure could be formed for the Tl-based oxide tape, then further increase in Jc would be expected. Hightemperature deformation accompanying the easy diffusion of the component atoms is thought to be an appropriate method to develop an oriented structure. As a result, a developed recrystallization texture is expected to be formed together with a deformation texture. We have previously reported [4] that no oriented structure is observed in hot-extruded Tl2Ba2Ca2Cu2Oy wire with Ag sheath. However, by changing such fabrication factors as particle size of powder and extrusion temperature, etc., there is a high possibility that a highly oriented structure can be formed in the Tl2Ba2Ca2Cu3 oxide. In this paper, we intend to examine the effect of mechanical grinding (MG) on the microstructure of hot-extruded Tl2Ba2Ca2Cu3Oy wires with Ag sheath and to investigate the possibility of fabricating an oriented structure. Appropriate amounts of BaCO3, CaCO3 and CuO were mixed well. The mixture was sintered at 1073 K for 12 h in an oxygen atmosphere. The resulting BaCaCuOy and Tl2O3 powders were mixed to form a mixture with a nominal composition of Tl:Ba:Ca:Cu 2:2:2:3. The composition agrees with that of the high Tc phase. This mixture was annealed at 1073 K for 12 h, followed by intermediate grinding and then annealing at the same conditions. The powder was mechanically grounded using a planetary ball mill for 1 to 20 h. The pot and ball were made of Al2O3. The MG powder was then put into an Ag can with inner and outer diameters of 6 and 8 mm, respectively, and a height of 15 mm. The Ag can was hot-extruded at 1113 K in air into a wire of 3 mm diameter. The extrusion speed was as low as 0.1 mm/min. The structure was examined by Xray diffractometry and optical microscopy. The superconducting properties of hot-extruded wire were measured by the DC four-probe technique. Fig. 1 shows the changes in the average particle size of the mechanically ground Tl2Ba2Ca2Cu3Oy powders as well as in the average grain size of the pellets prepared by annealing the MG powders at