A new hot strip rolling process is discussed which is capable of producing ultrafine, equiaxed ferrite grains (i.e. less than 2 µm)in the surface region of steel strip. Both microstructural and texture analysis of low carbon steel strip that has been rolled using this method are used to show that the ferrite forms by strain induced transformation. Analysis by electron backscatter diffraction (EBSD) indicates that a strong ferrite microtexture exists within the individual austenite grains in which the ferrite nucleates. The results from bulk X-ray texture analysis confirm that the ferrite forms as a result of transformation from austenite that has undergone heavy shearing during rolling, with nucleation occurring on the austenite substructure. In the centre region of the strip, a bainitic microstructure forms after rolling during air cooling. In the transition region between the surface and the centre of the strip, ferrite is shown to nucleate to form closely spaced parallel ‘rafts’ of ferrite grains traversing individual austenite grains. Again, EBSD is used to show that the ferrite located within these rafts is strongly textured, which, in combination with microstructural evidence, suggests that this ferrite nucleates along intragranular shear bands that form in the austenite in this region of the strip during rolling.