The simultaneous effects of cold rolling reduction and intercritical annealing time on the microstructure and tensile properties of St12 steel were studied. It was revealed that by increasing the rolling reduction, the ferrite grain size of the dual phase (DP) microstructure is refined and a chain-like morphology of martensite develops, which results in improvement of work-hardening capacity and the tensile properties. Such a microstructure can be obtained via applying an optimum holding time at the intercritical annealing temperature. Beyond that optimum, grain coarsening occurs with the resulting deterioration of tensile properties. It was also shown that by consideration of quenched sheet or by applying low reductions in thickness, secondary recrystallization or abnormal grain growth (AGG) takes place during intercritical annealing, which is characterized by small grains and some large ferrite grains containing martensite islands. This study clarified that applying high reduction in thickness for grain refinement and also controlling the holding time in the two-phase austenite-ferrite region are the essential prerequisites to achieve the desired tensile strength, ductility, and toughness.