High purity zirconium was used as the base material to fabricate Zr-1.0Fe-0.2Cu alloy. The microstructure and corrosion behavior in 400 ℃/10.3 MPa superheated steam of this alloy were investigated using SEM and TEM. The results show that the Zr₃Fe phase with orthogonal center structure is the typical second phase in the Zr-1.0Fe-0.2Cu alloy. Cu is prone to segregate to the Zr₃Fe phase, rather than to form Zr₂Cu phase. The addition of Cu element can refine the Zr₃Fe phase in the alloy. When exposed to the superheated steam for 100 days, the corrosion resistance of Zr-1.0Fe-0.2Cu alloy is better than Zr-1.0Fe alloy and Zr-4 remelting alloy, which indicates that adding a small amount of Cu element is beneficial. In the oxidation process, Cu-containing Zr₃Fe phase is oxidized behind the α-Zr matrix and is thus surrounded by the oxide film. As the oxidation progresses, Zr in the second phase is oxidized into tetragonal zirconia. Fe is oxidized into Fe₃O₄ phase with monoclinic structure. Further, the original aggregation state of Cu and Fe in the Zr₃Fe phase has disappeared due to the diffusion and oxidation in the oxide film of these elements.