The attainment of both strength and toughness is of vital importance to most structural materials, although unfortunately they are generally mutually exclusive. Here, we report that simultaneous increases in strength and toughness in a high-strength low-alloy (HSLA) steel were achieved by tailoring the heterogeneous microstructure consisting of soft intercritical ferrite and hard martensite via intercritical heat treatment. The heterogeneous microstructure features were studied from the perspective of morphology and crystallography to uncover the effect on mechanical properties. Specifically, the volume fraction of martensite increased with increasing annealing temperature, which resulted in increased back stress and effective stress, and thereby an improved strength-ductility combination. The enrichment of carbon and alloying elements in the martensite was lowered with the increase in annealing temperature. As a result, the hardness difference between the intercritical ferrite and martensite was reduced. In addition, the globular reversed austenite preferentially grew into the adjacent austenite grain that held no Kurdjumov-Sachs (K-S) orientation relationship with it, which effectively refined the coarse prior austenite grains and increased the density of high angle grain boundaries. The synergy of these two factors contributed to the improved low-temperature toughness. This work demonstrates a strategy for designing heterostructured HSLA steels with superior mechanical properties.