The microstructure evolution of 780 MPa hot dip galvanized dual-phase (DP) steel at heating stages of the annealing process was analyzed using a Gleeble−3500 thermal/mechanical simulator. A multifunction continuous annealing simulator was employed to investigate the effect of annealing process on microstructure and mechanical properties of hot dip galvanized DP steel. The experimental results show that ferrite recovery and recrystallization, pearlite dissolution and austenite nucleation and growth take place in the annealing process of hot dip galvanized DP steel. The hardenability can be significantly improved by trace addition of vanadium. When the soaking temperature reaches 780 °C, the tensile strength and total elongation of DP steel can reach 785MPa and 15%, respectively. The microstructure of DP steel mainly consists of a mixture of ferrite and martensite.