Microstructure evolution around highly reactive interfaces in processing of nanocrystallised multilayered metallic materials have been investigated and discussed in the present work. Conditions leading to grain refinement during co-rolling stage of the duplex processing technique are analysed using the multi-level finite element based numerical model combined with three-dimensional frontal cellular automata. The model was capable to simulate development of grain boundaries and changes of the boundary disorientation angle within the metal structure taking into account crystal plasticity formulation. Appearance of a large number of structural elements, identified as dislocation cells, sub-grains and new grains, has been identified within the metal structure as a result of metal flow disturbance and consequently inhomogeneous deformation around oxide islets at the interfaces during the co-rolling stage. These areas corresponded to the locations of shear bands observed experimentally using SEM-EBSD analysis. The obtained results illustrate a significant potential of the proposed modelling approach for quantitative analysis and optimisation of the highly refined non-homogeneous microstructures formed around the oxidised interfaces during processing of such laminated materials.