Herein, the effects of initial microstructure in combination with the severe plastic deformation on the developed microstructures and mechanical properties of dual‐phase (DP) steels are investigated. DP steels are produced by an intercritical annealing from the preliminarily heat‐treated samples with different initial microstructures. The constrained groove pressing (CGP) process is additionally applied before the final intercritical annealing step. It is found that the martensitic and tempered martensitic microstructures lead to DP steels with a good balance of strength and elongation because of finer and more uniformly dispersed martensitic islands. The ferrite/pearlite banded initial microstructure is not a proper choice for intercritical annealing as all mechanical properties become worse. The CGP can be employed before intercritical annealing for refining microstructure and enhancing damage tolerance of DP steels. Nevertheless, the impacts of the CGP process on the resulted strength of DP steels are obviously different depending on the initial microstructures. The amounts, sizes, and distributions of dimples and cleavage facets on the fracture surfaces of DP steels correlate well with the corresponding microstructures and tensile characteristics.