Abstract: With the development of energy extraction to offshore, deep sea, and polar fields, the service environment is becoming increasingly harsh. Hence, developing cryogenic steel with high strength, high toughness at low temperatures, and excellent welding properties has become an urgent requirement for economic development. With equipment and technology innovation, although the FH40-grade cryogenic steel base metal can be developed by grain refinement, the low-temperature impact toughness of its welded joints might be drastically reduced. Thus, the application of FH40-grade cryogenic steel has been severely restricted. To examine the evolution of the microstructure of welded joints of FH40-grade cryogenic steel and its effect on low-temperature impact toughness, the macrostructure, microstructure morphology, and composition at the welded joints were analyzed using a metallographic optical microscope and through scanning electron microscopy, electron backscatter diffraction (EBSD), and energy dispersive spectroscopy (EDS) analysis, respectively. The results indicate that the FH40 cryogenic steel base metal has excellent comprehensive mechanical properties with a yield strength of 420 MPa, tensile strength of 518 MPa, and Charpy impact energy of 162 J at −60 ℃, while the low-temperature toughness of the joint fusion line and the heat-affected zone was drastically reduced to 16 J. Results of a microstructure analysis indicate that the base metal of cryogenic steel was a fine polygonal ferrite and pearlite structure and pearlite bands occurred at the core position. The microstructure of the heat-affected zone of welding was mainly acicular ferrite, but evident martensitic bands were observed in the core. The results of the Vickers hardness test revealed that the hardness of 229.7 HV_0.05 for acicular ferrite and 313.7 HV_0.05 for martensite, which were approximately 40 HV_0.05 and 140 HV_0.05 higher than the original polygonal ferrite, respectively. An EBSD analysis indicates that the kernel average misorientation of the martensitic band was high with high internal stresses, which was the main cause of the sharp decrease in the low-temperature toughness of the welded joint. The presence of severe bias of carbon and manganese elements was confirmed through the EDS analysis of the banding in the heat-affected zone. In the rolling process, many continuous pearlite-banded structures were formed due to the severe central segregation of the base metal. In the welding process, the local hardenability increases due to the high local composition, and the martensite of hard and brittle phases was formed in the rapid cooling process, causing the increase in the local stress and hardness. Thus, the mismatch between soft and hard phases and organization led to a sharp decrease in the low-temperature toughness of the welded joint.