The processes leading to the retention of small quantities of austenite following the bainite and martensite phase transformations have been examined, together with the influence of retained austenite on the properties of low alloy steels. It was found that the upper and lower bainite transformations are separate reactions, although both involve a displacive transformation mode, Growth seems to occur by the repeated nucleation of martensitic sub-units, and this leads to an apparently slow growth rate, The partitioning of carbon from bainitic ferrite into residual austenite was thermodynamically proven to occur subsequent to transformation, and was shown to be directly responsible for the 'incomplete reaction phenomenon'. The nature of sympathetic nucleation and of the limited size of bainitic sub-units was rationalised in terms of the relatively low driving force available for bainite transformations. It was shown that the retention, stability and morphology of austenite could be directly derived from the basic transformation mechanism. Under certain circumstances, the bainitic retained austenite conferred exceptional strength/toughness properties to silicon steels; these were· shown to be superior to the properties associated with tempered martensite microstructures, Using thermodynamics, a model was established which could predict the toughness behaviour of silicon steel bainites simply from a knowledge of the composition. The tempered martensite embrittlement phenomenon was not found to be directly linked to the decomposition of retained austenite films, but to the coarsening of inter- or intra-lath carbides. In dislocated martensites, it was found that the distribution and quantity of retained austenite could be rationalised in terms of the degree of accommodation between adjacent martensite variants. The incipient twins generally observed in lath martensites were shown to be accommodation defects such that the extent of twinning was the greatest when adjacent martensite units had twin-related lattices. The thermodynamics of dislocated martensites have been briefly examined, The inhomogeneous deformation behaviour of dual-phase steels has been analysed in terms of available models.