Oxide Dispersion Strengthened Ferritic Stainless Steels (ODS FS) are candidate materials for structural components in fusion reactors. Their ultrafine microstructure and the presence of a very stable dispersion of Y-Ti-O nanoclusters provide reasonable fracture toughness, high mechanical and creep strength, and resistance to radiation damage at the operation temperature, up to about 750 °C. An innovative route to produce ODS FS with composition Fe-14Cr-2W-0.3Ti-0.3Y2O3 (wt.%), named STARS (Surface Treatment of gas Atomized powder followed by Reactive Synthesis), is presented. This route avoids the mechanical alloying (MA) of the elemental or prealloyed powders with yttria to dissolve the yttrium in the ferritic matrix. In this study, starting powders containing Ti and Y are obtained by gas atomization at laboratory and industrial scale. Then, a metastable Cr- and Fe- rich oxide layer is formed on the surface of the powder particles. During consolidation by HIP the metastable oxide layer at Prior Particle Boundaries (PPBs) dissociates, the oxygen diffuses towards saturated solutions or metallic Ti- and Y-rich particles, and Y-Ti-O nano-oxides (mainly Y2TiO5) precipitate in the ferritic matrix. Detailed Microstructural characterization by X-ray Photoelectron Spectroscopy (XPS), X-ray Absorption Spectroscopy (XAS), Scanning Electron Microscopy (SEM) and Transmission Electron Microscopy (TEM) of powders and consolidated materials is presented and correlated with mechanical behaviour.