By using TEM strain-induced precipitation of Nb(CN) during deformation of undercooled austenite was investigated in Nb-microalloyed steel. The results showed that at 1200°C all of Nb were dissolved and there were no Nb(CN) precipitates formed during cooling until down to 760°C; During deformation enhanced ferrite transformation Nb(CN) of dynamic precipitation required an incubation period, but compared with isothermal transformation it reduced significantly. Only when the strain increased to 0.69, Nb(CN) began to precipitate on dislocation nodes and grain boundaries. Furthermore the volume fraction of Nb(CN) precipitation increased with increasing strain but their coarsening wasn’t significant. Results showed that the measured grain size is in good agreement with the calculated value.