The annealing process of 800MPa grade hot dip galvanized DP steel was simulated on Gleeble-1500 thermo-mechanical simulator. The recovery and recrystallization of ferrite and the formation of austenite during the continuous heating process were studied in this paper. The results show that the fine equiaxed recrystallized nucleus started emerging nearby grain boundaries of deformed ferrites when the heating temperature was 630°C. With the increase of temperature, the recrystallized grain began to grow up, some new crystallized nucleus formed in other places with high stored energy of deformation. when the heating temperature was 690°C, the recrystallization process was basically finished, the deformed microstructure had been replaced by equiaxed ferrite grains. When the heating temperature was 730°C, the austenite nucleated on the carbide particles of the ferrite grain boundaries in the original pearlite area mainly. Some austenite also nucleated on the ferrite grain boundaries or the carbide particles within the ferrite grain. When the temperature was 750°C, the austenite began to grow along and parallel to ferrite grain boundaries.