This paper presents the formation of adiabatic shear band during the dynamic torsional test in an AISI 1018 cold rolled steel. A torsional Kolsky bar was used to impose a dynamic deformation rate, viz., γ ◎ 1500/sec, in a short thin-walled tubular specimen. The plastic deformation process in the cold rolled steel could be divided into the following three separate stages ; (1) the homogeneous plastic deformation, (2) the inhomogeneous strain distribution in the axial direction, and (3) the narrowing of the localization into an adiabatic shear band, resulting in a loss in the load-carrying capacity of the steel. It was also found from microscopic observations of the shear band that the fracture occurred by a process of nucleation and coalescence of microcracks which initiated by the the shear cracking of pearlite grains. Elongated dimples were observed on fracture surfaces, indicating ductile fracture due to the local temperature rise during the dynamic deformation.