Zirconium alloys are widely used as the fuel cladding material in pressurised water reactors, accumulating a significant population of defects and dislocations from exposure to neutrons. We present and interpret synchrotron microbeam X-ray diffraction measurements of proton-irradiated Zircaloy-4, where we identify a transient peak and the subsequent saturation of dislocation density as a function of exposure. This is explained by direct atomistic simulations showing that the observed variation of dislocation density as a function of dose is a natural result of the evolution of the dense defect and dislocation microstructure driven by the concurrent generation of defects and their subsequent stress-driven relaxation. In the dynamic equilibrium state of the material developing in the high dose limit, the defect content distribution of the population of dislocation loops, coexisting with the dislocation network, follows a power law with exponent $α\approx 2.2$. This corresponds to the power law exponent of $β\approx 3.4$ for the distribution of loops as a function of their diameter that compares favourably with the experimentally measured values of $β$ in the range $ 3 \leq β\leq 4$.