Interstitial-free steel sheets have been processed using a novel severe plastic deformation technique - continuous frictional angular extrusion (CFAE), in order to produce ultrafine grained structures. The deformation was carried out at room temperature and individual sheet specimens were repeatedly processed to various passes. An overall grain size of 200nm was achieved after 8 passes (or an equivalent total strain of 5.3). The present paper reports the evolution of microstructures during deformation, which were examined and characterized using electron backscatter imaging and high resolution EBSD in a field emission gun SEM. The mechanisms of grain refinement are discussed.