A methodology for discrete simulation has been developed that incorporates many structural characteristics of polycrystalline material properties, such as: texture, grain boundaries, microstructure, phase composition, chemical composition, stored energy, and residual stresses. The computer models that have been developed to study oxidation processes are based on a quantitative description of the oxide and substrate structure. That description allows for the simulation of the transport of metal and oxygen ions along interfaces and bulk portions of material and the formation of oxide structure. The proposed model can help researchers and engineers to understand the physical mechanism of oxidation in order to predict material behavior and optimize material processing and properties. In this paper, the results on the simulation of the oxidation process are presented on different substrates of Zr-Nb alloys, which are used for the manufacturing the pressure tubes used in the CANDU nuclear reactors. The effects of substrate texture, microstructure, grain boundaries, and beta phase distribution on oxidation kinetics and hydrogen permeation are demonstrated.