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Digital image correlation was applied to analyze the strain distribution and deformation-induced martensitic transformation of retained austenite in a low alloy transformation-induced plasticity (TRIP) steel plate under tension. The distribution of strain instilled by tensile deformation was inhomogeneous at a microscopic scale. Strain generated by deformation-induced martensitic transformation was successfully visualized and it led to a homogeneous strain distribution. The retained austenite in the high strain region transformed to martensite preferentially, which demonstrates that inhomogeneous strain distribution affects the stability of retained austenite. The high resolution strain distribution exhibited that a certain amount of strain instilled into retained austenites and there are a lot of strain concentration sites at ferrite/ austenite interfacial boundaries in high strain region. Therefore, the stress concentration at the ferrite/ retained austenite interfacial boundary occurs due to the difference of strain between the ferrite matrix and retained austenite. These strain accumulation in a retained austenite and/or stress concentration at ferrite/retained austenite interfacial boundary may induce martensitic transformation in high strain regions.