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The form of existance of Nb and N in medium manganese steel and influence of Nb and N on microstructures and work-hardening properties have been researched. The mechanism of work hardening of austenitic Mn steel has been conducted. Experimental results show that when trace Nb and N are added into the steel, they can form carbide, nitride of Nb (NbC, NbN, Nb(N . C)), and become heterogeneous nuclei of r-Fe. When addition contents of Nb and N are from 0.15% to 0.25% and 0.03% to 0.05% respectively, grain size can be 6-7 Grade. Through ageing treatment, grained and dispersed secondary phases were obtained. Nb and N can decrease the stacking faults energy. Under no-severe impact loading conditions, the structures of Mn 7 is high density dislocation, tangled dislocation, stacking fault and strain-induced martensite. So that the work hardening of Mn7 is the combined results of dislocation strengthening and the formation of straininduced martensite.