We fabricated flanged outer races for wheel bearing units using 0.52%C clean steels, and then characterized and studied the transformation behavior. The outer races produced by hot forging and high frequency induction hardening in this study were analyzed through microstructural characterization using OM, SEM, TEM, and X-ray diffractometer and their microhardness depth profiles of the raceway contacted by balls were measured using MVH tester. The surface hardened layers with a uniform hardness profile in the raceway consisting of very fine martensite with sub-micron sized retained austenite could be formed for very short time during high frequency induction hardening after hot forging. The very fine martensite may be transformed on rapid cooling, from the inhomogeneous austenite nucleated on rapid heating in small particles of pearlitic cementite fragmentated by hot forging. On the other hand the sub-micron sized retained austenite may be chemically stabilized due to their extremely small size, from the small austenite nucleated at the grain boundaries.