In order to produce nano-structured carbon steel, a 0.45%C steel was quenched and warm-compressed on a Gleeble 3500 Machine. The microstructural evolution during the process was studied by using an optical microscope and a transmission electron microscopy. The starting microstructure was lath martensite with a small amount of flake martensite. A lot of high-angle boundaries between martensite laths were induced after 50% reduction compression at 350°C. The microstructure of the specimen compressed at 600-650°C was nano-carbides + equiaxed ultrafine ferrite grains. The mechanism for grain refinement is incomplete dynamic recrystallization.