The current work investigates the microstructure evolution and softening processes that take place during annealing of an austenitic Ni-30Fe model alloy subjected to hot deformation in the dynamic recrystallization (DRX) regime. The substructure of the deformed matrix grains largely comprised organized microband arrays, though that of the DRX grains consisted of more random, complex subgrain/cell arrangements. This substructure disparity was also reflected by the distinct difference in the mechanism of post-deformation softening taking place during annealing of the deformed matrix and DRX grains. In the former, the recrystallization process took place through nucleation and growth of new grains fully replacing the deformed structure, as expected for the classical static recrystallization (SRX). The corresponding texture was essentially random, in contrast to that of the DRX grains dominated by low Taylor factor components. The microbands originally present within the deformed matrix grains displayed some tendency to disintegrate during annealing, nonetheless, they remained largely preserved even at prolonged holding times. During annealing of the fully DRX microstructure, a novel softening mechanism was revealed. The initial post-dynamic softening stage involved rapid growth of the dynamically formed nuclei and migration of the mobile boundaries in correspondence with the well-established metadynamic recrystallization (MDRX) mechanism. However, in contrast to the deformed matrix, SRX was not observed and the sub-boundaries within DRX grains rapidly disintegrated through dislocation climb and dislocation annihilation, which led to the formation of dislocation-free grains already at short holding times. Consequently, the DRX texture initially became slightly weakened and then remained largely preserved throughout the annealing process.