The microstructural and textural evolution and changes in Grain Boundary Character Distribution (GBCD) during annealing of a prior cold worked (30%, 50% and 80%) Fe–C martensitic steel have been studied, and correlated with mechanical properties. It has been demonstrated that ultrafine grains in the range 50–250 nm can be obtained by choosing appropriate amounts of cold rolling and annealing. Increasing the annealing temperature in all the three materials produces the expected results, namely decrement of strength with a concomitant increase in ductility. Although reasonably sharp γ-fibres were obtained in most of the cases, the very low r-bar values (<1.0) make the steels unsuitable for deep drawing purposes. It has been suggested that grain boundary engineering may lead to better strength–ductility combinations in this steel for enhanced range of applications.