Ultra low carbon (ULC) steel samples were deformed in near plane-strain compression mode with different strains, strain rates and temperatures. Different aspects of microstructural developments, for deformed γ (ND//) and θ (ND//) fibre grains, were investigated using X-ray line profiles and high resolution electron diffraction. The study clearly showed increase in grain interior strain localizations and in-grain misorientation at the intermediate deformation temperature. This effect was more apparent in γ-fibre and can best be explained through orientation sensitive recovery. γ-fibre also demonstrated higher potential for increase in dislocation density. This was observed experimentally and simulated through discrete dislocation dynamic simulations. Higher textural softening with stronger increase in dislocation density and possible effects of orientation sensitive recovery appears to define the orientation dependent recovery in low carbon steels.