Interstitial-free steel (IF steel) underwent severe plastic deformation by equal-channel angular extrusion/pressing (ECAE/P) to improve its strength, and then it was annealed to achieve a good strength-ductility balance. The coarse-grained microstructure of IF steel was refined down to the submicron level after eight-pass ECAE. The ultrafine-grained (UFG) microstructure with high dislocation density brought about substantially improved strength but limited tensile ductility. The limited ductility was attributed to the small, uniform elongation caused by early plastic instability. The annealing at temperatures below 723 K (450 °C) for 1 hour did not lead to remarkable softening, whereas annealing at temperatures up to 923 K (650 °C) resulted in complete softening depending on the development of recrystallization. Therefore, the temper- ature of approximately 923 K (650 °C) can be considered as a critical recrystallization tem- perature for UFG IF steel. The annealing at 873 K (600 °C) for different time intervals resulted in different stress–strain response. Uniform tensile elongation increased at the expense of strength with annealing time intervals. After annealing at 873 K (600 °C) for 60 minutes, the yield strength, tensile strength, uniform elongation, and total elongation were found to be 320 MPa, 485 MPa, 15.1 pct, and 33.7 pct, respectively, showing the better combination of strength and ductility compared with cold-rolled samples.