A compression type hot deformation simulator was used to investigate ferrite nucleation from deformed austenite of low carbon steels. In the specimen deformed at 725℃, just above the Ar3 temperature, austenite grains were elongated and unrecrystallized and a number of banded equiaxed ferrite grains, 2∼3㎛ in size along elongated austenite grain boundary appeared. These very fine ferrites were thought to nucleate and dynamically recrystallize during hot deformation. The effects of amount of deformation and deformation temperature on ferrite transformation were also investigated. Increasing the amount of deformation and lowering the deformation temperature caused the acceleration of strain-induced transformation to ferrite. Orientation changes between ferrite grains were studied by Kikuchi pattern analysis.