A new kind of die steel, WD1 used for warm work dies, was developed. The behavior of carbide dissolution and precipitation in WD1 steel during heat treatment was investigated by using optical microscopy, X-ray diffractometer and transmission electron microscopy. The results show that there are three types of carbide, namely MC, M6C and M7C3 carbide, in the annealed WD1 steel; and M6C and M7C3 carbides are dissolved totally during heating for quenching; then MC, M2C, M6C and M7C3 carbides are precipitated during tempering. The secondary hardening peak is reached after tempering at 520°Cfor two hours. This hardening is mainly caused by the precipitation of Mo2C carbide.