Several Si-Mn steels with similar Si and Mn levels and carbon contents, ranging from 0.25 to 0.75 wt %, were studied to determine the effect of bainitic transformation on the microstructure of Si-Mn steel. The microstructure was categorized by optical metallography, scanning and transmission electron microscopy, and X-ray diffraction. The results showed the existence of an optimum transformation time to produce the maximum content of retained austenite, though the retention of a large amount of retained austenite was encouraged as a result of bainitic transformation. The microstructure consisted of carbon-free upper bainite whose individual ferrite was separated by the ’thin-film’ type of retained austenite, while the ’blocky’ type of austenite was also found. The results also showed that carbide precipitation occurred in the residual austenite after the optimum time, which decreased the retained austenite content. The retained austenite stability is discussed in relation to the carbon content and morphology of the retained austenite.