The oxide dispersion strengthened (ODS) ferritic steel and non-ODS reduced-activation ferritic (RAF) steel were irradiated at 773 K by means of a dual-beam ion irradiation technique to a dose of 0.4 dpa with simultaneous helium implantation up to 1000 appm. Microstructural changes were investigated by transmission electron microscopy. The RAF steel showed a preferential formation of cavities at grain boundaries, precipitate interfaces and dislocations. In contrast, the ODS ferritic steel showed a homogeneous and fine distribution of cavities in the matrix. This paper discusses the superior resistance of the ODS ferritic steel against development of cavities in terms of the effects of nano-oxide particles dispersed in the matrix.