Ultrafine-grained dual phase (DP) steels with different Nb contents (0.00, 0.06 and 0.12 wt%) were produced by cold-rolling followed by intercritical annealing of ferrite/martensite starting microstructure at 770 °C for different holding times. Scanning electron microscopy, equipped with electron backscattered diffraction (EBSD) detector, nanoindentation and tensile testing were used to characterize microstructural evolutions and their correlations to the strain hardening and fracture behavior. EBSD results confirmed the retardation effect of Nb on recrystallization. It was found that the strains stored in the grains and density of geometrically necessary dislocations (GNDs) were increased with the addition of Nb. Strain hardening analysis showed that plastic deformation of the DP steels occurred in three distinct stages, which based on the EBSD results, nanoindentation and fracture analysis, were controlled by microstructural features such martensite volume fraction and size, density of GNDs and individual ferrite and martensite tensile properties.