The nanostructure and phase evolution in low-temperature oxidized (40-250 degrees C), fine UO2 powders (<200 nm) have been investigated by X-ray diffraction (XRD) and high-resolution transmission electron microscopy (HR-TEM). The extent of oxidation was also measured via in situ thermogravimetric analysis. The oxidation of fine powders was found to, proceed differently as compared to oxidation of coarse grained UO2. No discrete surface oxide layer was observed and no U3O8 was formed, despite the high degree of oxidation (up to O/U = 2.45). Instead, nanosized (5-15 nm) amorphous nuclei (interpreted as amorphous UO3), unmodulated and modulated U4O9, and a continuous range of U3O7-z phases with varying tetragonal distortion (c/a > 1) were observed. Oxidation involves formation of higher uranium oxides in nanodomains near the grain surface which, initially, have a disordered defect structure ("disordered U4O9"). As oxidation progresses, domain growth increases and the long period modulated structure of U4O9 develops ("ordered U4O9"). A similar mechanism is understood to happen also in U3O7-z.