In this paper, the process of severe cold-rolling and annealing for Q235 steel with lath martensite has demonstrated a new promising technique for producing in-situ composite multi-nanolayer steel. Cold rolling and subsequent annealing have great impact on microstructure evolution as well as mechanical properties. In the as-rolled state, the strength (b 2112 MPa) is approximately four times increased than as-received material, which is attributed to work hardening and grain refining during cold rolling. As cold-rolled sample subjected to further annealing below 500 °C, deformed microstructure underwent further recovery and recrystallization and finally became refined equiaxed grains; ultraﬁne ferrite grains, nano-carbides precipitated uniformly were seen in the specimen annealed at 500 °C, and the phenomenon of fracture delamination was observed from the specimens, the delamination plane was parallel to the rolling plane, in-situ composite weak interfaces effect has great impact on the fracture surface. Annealing at and above 600 °C resulted in coarse ferrite grains with spheroidized coarse carbides, causing grain growth.