The paper presents an overview of a number of unusual phase transformations which take place in pearlitic steels in conditions of the severe deformation, i.e. combination of high pressure and strong shear strain. Strain-induced cementite dissolution is a well-documented phenomenon, which occurs during cold plastic deformation of pearlitic steels. Recently new results which can shed additional light on the mechanisms of this process were obtained thanks to 3DAP and HRTEM investigations of pearlitic steel deformed by high pressure torsion (HPT). It was shown that the process of cementite decomposition starts by carbon depletion from the carbides, which indicates that the deviation of cementite’s chemical composition from the stoichiometric is the main reason for thermodynamic destabilisation of cementite during plastic deformation. Important results were obtained regarding the distribution of released carbon atoms in ferrite. It was experimentally confirmed that carbon segregates to the dislocations and grain boundaries of nanocrystalline ferrite. Another unusual phase transformation taking place in nanocrystalline pearlitic steel during room temperature HPT is a stress induced α→γ transformation, which never occurs during conventional deformation of coarse grained iron and carbon steels. It was concluded that this occurred due to a reverse martensitic transformation. The atomistic mechanism and the thermodynamics of the transformation, as well as issues related to the stability of the reverted austenite will be discussed.