Transmutation of spent nuclear fuels is globally being considered to reduce their radioactivity through capture and decay of minor actinides and fission products. Such reduction in radioactivity may enable their disposal in potential repositories for shorter durations. The target structural materials used in transmutation may undergo plastic deformation. A candidate target structural material, namely martensitic Alloy EP-823 was subjected to different levels of cold-reduction. The cold-worked materials were analyzed for characterization of the resultant residual stresses by positron annihilation spectroscopy (PAS). Efforts were also made to characterize dislocations in these cold-worked materials by transmission electron microscopy, and to correlate them to the residual stresses characterized by the PAS technique. This study indicates that the dislocation density was increased at higher levels of cold-reduction, which was associated with enhanced residual stress in terms of a line-shape parameter determined by the PAS technique.