In cold working metal forming process, severe plastic deformation results in changes in the material properties. Earlier researches mainly investigated the rolling and equal channel angular extrusion (ECAE) processes. This study focuses on the fine-blanking process, specially the increasing material hardness on the fineblanked sprocket part. The microstructure around the cut surface is observed and the finite element analysis is done to clarify the mechanism of the increasing hardness as well. The microstructure revealed increasingly compressed and elongated grain structure of the contributed grain flow and orientation, as the blankholder and counterpunch forces increased. This resulted in the increased material hardness around the cut surface. Thus, these results theoretically clarified the mechanism of the increasing material hardness in the fine-blanking process regarding microstructural evolution, with the associated finite element analysis. Therefore, the special characteristic features in the fine-blanking process, result in the pronounced hardening around the fineblanked surface.