In water cooled reactors, the friction between spacer grid and fuel rod can lead to severe wear and it is an important topic to study. In the present study, sliding wear behavior of zirconium alloy was investigated in water and dry state using the pin-on-disc sliding wear tester. Sliding wear resistance of zirconium alloy against heat treated inconel alloy was examined at room temperature. The parameters in this study were sliding velocity, axial load and sliding distance. The wear characteristics of zirconium alloy was evaluated by friction coefficient, specific wear rate and wear volume. The micro-mechanisms responsible for wear in zirconium alloy were identified to be micro-cutting, micro-pitting, delamination and micro-cracking of deformed surface zone.