In this review consideration is given to the sequence of processes which can occur in dispersion strengthened materials during plastic deformation. Consideration is given to the role of elastic back stresses and their influence on the magnitude of the Bauschinger effect and on dimensional stability. The formation and stability of the plastic zones around second phase particles is described and the competitive processes of void formation and diffusional relaxation are considered. Attention is given to the description of the microstructural features of dispersion hardened materials in terms of the local volume fraction of clustered particles rather than the average size and volume fraction. Evidence is presented to show that a number of important properties such as fracture behavior and recrystallization need to be described in terms of local volume fractions. In the final section of the review emphasis is placed on the relationship between basic concepts of dispersion hardening and the development of new processing methods capable of producing synthetic microstructures with specific properties.