<p>Oxide dispersion strengthened (ODS) materials are typically processed using powder metallurgy routes or additive manufacturing to ensure homogeneous nanoparticle distribution in the materials. Processing routes where the nanoparticles are formed during manufacturing (in-situ) can effectively prevent problems occurring in ex-situ routes (e.g. powder blending) such as nanoparticle agglomeration. One of the approaches to manufacture in-situ ODS materials is the use of reactive process gases during powder bed fusion–laser beam (PBF–LB). Processing with carbon dioxide (CO₂) causes O uptake, which promotes nanoparticle formation. Manufacturing in CO₂ is accompanied by the formation of surface slag layers on the samples, whose effect on nanoparticle formation is yet unclear. In this work, the role of the slag layer on the formation of nanoparticles, as well as the layer formation mechanism, is studied. For this purpose, a model alloy, consisting of pure Fe alloyed with 4.3&#xa0;wt%&#xa0;Ti is processed in CO_2, and the influence of the powder layer height, sample height, and re-melting on slag layer and nanoparticle formation is investigated. Results show that nanoparticles do not originate from the slag layer. Instead, the slag layer is formed by liquid nanoparticles floating to the surface of the melt pool. The slag layer accumulates from layer to layer until the slag layer thickness converges to a steady value. This work contributes to the understanding of particle formation mechanisms occurring in melt pools in additive manufacturing processes, which is necessary to define the requirements for alloy design of advanced in-situ particle reinforced ODS materials.</p>