Recent studies of nanocrystalline materials have often found that the deformation mechanisms are radically different to those in coarse-grained materials, resulting in quite different mechanical properties for such materials. The use of pearlitic steels for the study of the deformation mechanisms in bcc materials with ultrafine grain sizes is quite convenient, because it is relatively straightforward to obtain a homogenous nanocrystalline structure with a mean grain size as small as 10 nm using various modes of severe plastic deformation (SPD). In this paper we show that high-pressure torsion of an initially pearlitic steel results in a nanostructured steel in which austenite has been formed at or close to room temperature. The orientation relationship between neighboring ferrite and austenite grains is the well-known Kurdjumov-Sachs orientation relationship, i.e. the same observed in temperature-induced martensitic transformation of iron and steels. It is shown that this must have resulted from a reverse martensitic transformation promoted by the high shear strains experienced by the material during severe plastic deformation of the nanocrystalline structure. This transformation represents an alternative deformation mechanism that can be activated when conventional deformation mechanisms such as slip of lattice dislocations become exhausted.