The paper is focused on application of multi-scale 2D CAFE method. CAFE approach consists of Cellular Automata (CA) model of microstructure development and the thermal-mechanical finite element (FE) code. Dynamic recrystallization phenomenon is taken into account in 2D CA model which takes advantage of explicit representation of microstructure, including individual grains and grain boundaries. Flow stress is the main material parameter in mechanical part of FE and is calculated on the basis of average dislocation density obtained from CA model. The results attained from the CAFE model were validated with the experimental data for austenitic steel X3CrNi18-9. The samples were subjected to axisymmetrical hot compression test. Compression forces were recorded during the tests and flow stresses were determined using inverse method. Light microscopy and EBSD analyses were performed for the initial and final microstructures of the samples.