The formation of intragranular acicular ferrite (IAF) in a Zr–Mg–Al deoxidized low carbon steel was investigated by means of dilatometry, thermo‐mechanical controlled processing, and combined these results with metallographical observations. The typical inclusions were characterized by scanning electron microscopy and the chemical composition of the inclusions was determined by energy dispersive spectroscopy. The role of these inclusions on the formation of IAF was discussed. The results indicate that the Al2O3–MgO–ZrO2 and Al2O3–MgO–ZrO2–MnS multiphase particles with 1.5–3.0 μm size can be the effective nuclei of IAF, whereas the Al2O3–MnS inclusions are inert. A Mn–depletion zone is observed adjacent to the Al2O3–MgO–ZrO2–MnS inclusion, which is believed to be one of the possible mechanisms to promote the IAF formation. Through dilatometric tests, for Zr–Mg steel, the IAF structure forms in the cooling rate range of 1–10 °C s−1, and the most appropriate cooling rate for IAF is in the range of 5–10 °C s−1. A fine grained microstructure and an improvement of toughness and tensile properties are obtained after subjecting the steel grade with Zr and Mg additions to a special thermo‐mechanical regime.