Abstract: The nucleation of ultra-fine ferrite inside austenite was followed during deformation-enhanced transformation in a Q235 low carbon steel. EBSD technique was applied to reveal the orientation features of ferrite formed at different places. Results indicate that there are two typical nucleation sites inside austenite, namely, deformation bands and deformation inhomogeneities near austenite grain boundaries. Increasing austenite grain size and decreasing deformation temperature favor to the ferrite formation at deformation bands. In the suitable deformation temperatures of A₃-A_r3 for ultra-fine ferrite, the deformation near A, leads to a uniform distribution of ferrite as well as second phases. The band-like ferrite and second phases caused by the nucleation at deformation bands gives rise to not only the anisotropy in microstructure but also in ferrite orientation.