Cermet nuclear fuels have significant potential to enhance fuel performance because of low internal fuel temperatures and low stored energy. The combination of these benefits with the inherent proliferation resistance, high burnup capability, and favorable neutronic properties of the thorium fuel cycle provide intriguing options for using thoria based cermet nuclear fuel in advanced nuclear fuel cycles. This paper describes aspects of a Nuclear Energy Research Initiative (NERI) project with two primary goals: (1) Evaluate the feasibility of implementing the thorium fuel cycle in existing or advanced reactors using a zirconium-matrix cermet fuel, and (2) Develop enabling technologies required for the economic application of this new fuel form. Critical elements in the demonstration of this new fuel form include developing low-cost fabrication methods and characterizing the cermet properties and important performance parameters. A powder-in-tube drawing and heat treatment process is being evaluated as an alternative to hot extrusion. In this method, zirconium metal and ceramic microspheres are mixed, poured into a Zircaloy shell, and compacted into simulated fuel pins. Important processing variables being evaluated include the amount of compaction required to achieve a desired matrix density and the inter-drawing thermal treatment temperature required to achieve adequate matrix fusion and grain growth.