The ultrafine grained ferritic steels possess high strength but low ductility due to the shortage of work hardening. Fine grained ferrite-martensite dual phase microstruc­ture was obtained in a microalloyed steel and low carbon steels through intercritical annealing of the cold rolled martensite. The dual phase microstructure was uniform and the ferrite grain size was smaller in the microalloyed steel resulted from the pin­ning effect of microalloyed precipitates. But ferrite grown apparently and the volume fraction of the martensite was much higher without the addition of microalloying el­ements. By introducing martensite into the fine grained ferrite, the work hardening was effectively improved, leading to better mechanical stability. As a result of the fine ferrite grain size as well as uniform distribution of the martensite, the work harden­ing was enhanced, showing better strength-ductility balance in the microalloyed dual phase steel.