Heavy deformation of metastable austenite (below Ae3) or both austenite and ferrite in the two-phase region (between Ar3 and Ar1) has been found to develop ultra-fine ferrite grain structures with average grain sizes less than 3 μm. The sequence of different dynamic softening mechanisms involved in the grain refinement during heavy intercritical deformation, such as, dynamic recovery, dynamic recrystallization, and dynamic strain induced austenite→ferrite transformation, has been analyzed by considering strain partitioning between austenite and ferrite. Grain refinement is expected to be dictated by dynamic strain induced transformation (DSIT) at higher deformation temperatures (>1100°C) and pronounced dynamic recovery of ferrite at lower deformation temperatures (<1100°C). Evolution of crystallographic texture was dependent on the grain refinement mechanism and gamma fiber components (ND//<111>) and alpha fiber components (RD//<110>) dominated the texture at higher and lower deformation temperatures, respectively.