Abstract: This invention provides an improved process of preparing UO.sub.2 powder from poor quality, partially oxidized powder containing organic and inorganic impurities. The process is illustrated in the flow chart of FIG. 1 which includes the steps of (a) oxidizing a uranium-containing scrap also containing inorganic and cationic organic impurities; (b) solubilizing, typically with nitric acid, the uranium contained in the oxidized scrap to produce uranyl nitrate; (c) solvent extracting the solubilized product of step (b) to remove cation impurities to provide a purified uranyl nitrate solution; (d) precipitating the purified uranyl nitrate with ammonia to form ammonium diuranate powder; and (e) calcining and passivating the ammonium diuranate powder to produce UO.sub.2 powder; and optionally (f) forming the UO.sub.2 powder of step (e) into pellets and sintering the formed pellets to produce sintered UO.sub.2 pellets.