Dry-milled, heat-conditioned dehulled oats form a coarse whole, nondefatted oat flour. Then, without first removing the fat, the oats are dry-fractionated into coarser bran and finer oat flour. Sifting separates the coarse oat flour into a coarser fraction oat bran with more concentrated beta-glucan and a finer oat flour. The oat bran is milled a second and third time and sifted to yield oat bran with high beta-glucan content (7 to 9%) and oat flour with relatively low beta-glucan content (3%). The oat bran and oat flour can be used to prepare ready-to-eat cereals.