Work hardening behavior and microstructure development during deformation by cold rolling were investigated in iron with different grain size. Grain refinement makes the introduction of dislocation easier. For instance, under the same deformation condition (5% reduction in thickness), dislocation density is the order of 1014m-2 in a coarse grained material (mean grain size; 20μm), while it reaches 7×1015m-2 in an ultrafine grained material (0.25μm). It is well known that the yield stress of metals is enlarged with an increase in dislocation density on the basis of the Bailey-Hirsch relationship. However, it should be noted that the ultrafine grained material never undergoes usual work hardening although the dislocation density is surely enhanced to around the order of 1016m-2: 0.2% proof stress is almost constant at 1.4 ~ 1.5GPa regardless of the amount of deformation. The dislocation density of 1016m-2 is thought to be the limit value which can be achieved by cold working of iron and the yield stress of iron with this dislocation density (ρ) is estimated at 1.1GPa from the Bailey-Hirsch relationship; σd [Pa] = 0.1×109 + 10 ρ1/2. On the other hand, yield stress of iron is enhanced by grain refinement on the basis of the Hall-Petch relationship; σgb [Pa] = 0.1×109 + 0.6×109 d-1/2 as to the grain size d [μm]. This equation indicates that the grain size of 0.35 μm gives the same yield stress as that estimated for the limit of dislocation strengthening (1.1GPa). As a result, it was concluded that work hardening can not take place in ultrafine grained iron with the grain size less than 0.35 μm because dislocation strengthening can not exceed the initial yield stress obtained by grain refinement strengthening.