This work presents a detailed microstructure and texture study of various hydrided Zircaloy-4 materials by neutron diffraction and microscopy. The results show that the precipitated δ-ZrH1.66 generally follows the δ(111)//α(0001) and δ[ ]//α[ ] orientation relationship with the α-Zr matrix. The δ-hydride displays a weak texture that is determined by the texture of the α-Zr matrix, and this dependence essentially originates from the observed orientation correlation between α-Zr and δ-hydride. Neutron diffraction line profile analysis and high-resolution transmission electron microscopy observations reveal a significant number of dislocations present in the δ-hydride, with an estimated average density one order of magnitude higher than that in the α-Zr matrix, which contributes to the accommodation of the substantial misfit strains associated with hydride precipitation in the α-Zr matrix. The present observations provide an insight into the behaviour of δ-hydride precipitation in zirconium alloys and may help with understanding the induced embrittling effect of hydrides.