A new silver-based alloy with 2 wt.% of lanthanum (La) was studied as a potential candidate for electric contact material. The alloy was prepared by rapid solidification, performed by the melt spinning technique. Microstructural examination of the rapidly solidified ribbons revealed very fine grains of αAg and intermetallic Ag5La particles, which appear in the volume of the grains, as well as on the grain boundaries. Rapid solidification enabled high microstructural refinement and provided a suitable starting microstructure for the subsequent internal oxidation, resulting in fine submicron-sized La2O3 oxide nanoparticle formation throughout the volume of the silver matrix (αAg). The resulting nanostructured Ag-La2O3 microstructure was characterised by high-resolution FESEM and STEM, both equipped with EDX. High-temperature internal oxidation of the rapidly solidified ribbons essentially changed the microstructure. Mostly homogeneously dispersed nano-sized La2O3 were formed within the grains, as well as on the grain boundaries. Three mechanisms of internal oxidation were identified: (i) the oxidation of La from the solid solution; (ii) partial dissolution of finer Ag5La particles before the internal oxidation front and oxidation of La from the solid solution; and (iii) direct oxidation of coarser Ag5La intermetallic particles.