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A mathematical model has been developed to describe the intercritical deformation of a low‐carbon steel under compression. It applies the finite‐element method in a 2D axially symmetric computation domain. By means of a special algorithm different types of microstructures to be used by the deformation model can be constructed, as far as ferrite and austenite phase fractions and distributions are concerned. Calculated results on the basis of constructed microstructures deviate significantly from mixture‐rule predictions. Compression curves exhibit a decreasing strength with increasing connected areas of either phase. The corresponding strain ratios demonstrate the difference in strain behaviour between the ferrite and the austenite phase. In the case of larger connected areas the contribution of the soft ferrite phase to the total strain is much more pronounced than that of the hard austenite phase.