Shear localization during wire rolling of zircaloy-2 at cryo temperature has been investigated in the present work. Bulk nanocrystalline zircaloy-2 has been obtained by optimized annealing of cryorolled alloy. Microstuctural characterization and mechanical behavior of the processed alloy have been performed by X-ray diffraction (XRD), optical microscopy, Electron backscatter diffraction (EBSD), Transmission electron microscopy (TEM) and tensile testing. The presence of (ω) phase after wire rolling has been observed from XRD. The tensile strength of deformed zircaloy-2 (true strain = 2.77) was found to be 1015 MPa with a uniform ductility of 10.8%, while loss of tensile strength (837 MPa) and increase in ductility (14.8%) after annealing at 400 °C for 30 min were observed. Nanocrystalline structure with an average grain size of 30 nm has been formed after annealing at 400 °C for 10 min. The microstructure reveals the formation of shear bands during wire rolling at cryo temperature due to large applied strain in each pass. The possible mechanism of deformation and shear band formation has been discussed. The effect of strain rate on amount of work converted to heat (β) during shear band formation has been discussed. The calculation reveals that the rise in temperature during deformation was 831.6 °K on applying a strain of 2.77, during wire rolling at cryo temperature. © 2018 Elsevier B.V.