The influence of vanadium on the development of an acicular ferrite microstructure has been investigated in a low carbon steel. Optical and electron microscopy were carried out to identify the precipitates, inclusions and constituents of the acicular ferrite microstructures. By the addition of vanadium, the main microstructural constituent was changed from a side plate ferrite to an acicular ferrite. VCN precipitates, which were known to favor the nucleation of acicular ferrite, were formed on the (Mn,Si) oxide and MnS particles. The presence of vanadium in alloys suppressed the formation of a side plate ferrite and reduced the transformation of ferrite during an isothermal transformation. Nucleation of intragranular ferrite and a subsequent sympathetic nucleation of ferrite within austenite grains were favored in the vanadium containing steel and an acicular ferrite microstructure was developed.