Phase transformation studies of uranium-2 wt% zirconium alloy have been carried out using optical microscopy, SEM with EDS, XRD and dilatometer as analytical tools for different heat treated samples. It is shown that at room temperature as-cast, step-cooled and annealed samples contain only super saturated alpha phase instead of equilibrium alpha and delta phase. However, morphology of the alpha phase gets changed with the thermal history. Water quenched sample contains alpha' acicular martensite of orthorhombic structure, as confirmed by the XRD. Variation in the lattice parameters of alpha phase are calculated under different heat treated conditions. Thermodynamic calculations presented here show that there are two critical concentrations of zirconium which decide the way phase transition should proceed from the gamma phase field upon rapid cooling. Quenching dilatometry shows that there are two transitions while cooling the sample from 900 degrees C rapidly, which is in agreement with the thermodynamic calculations. (C) 2008