Hadfield steel, under unit pressure conditions, strengthens itself by forming a high density dislocation structure, which results in increased resistance to dynamic impact wear. However, under abrasion conditions, the homogeneous microstructure of the cast steel is insufficient to achieve the expected service life. The aim of the research is to conduct a comparative analysis of the material in its as-delivered state and after two-stage heat treatment (isothermal annealing followed by re-austenitisation). It was found that after isothermal annealing of X120Mn12 grade steel at a temperature of 510 °C, a microstructure with a complex morphology consisting of colonies of fine-grained pearlite, (Fe,Mn)3C carbides distributed along the grain boundaries of the former austenite and needle-like (Fe,Mn)3C carbides was obtained in the austenite matrix. The subsequent thermal treatment of the steel with the use of supersaturating annealing at 900 °C resulted in a heterogeneous microstructure consisting of evenly distributed globular carbide precipitations in a matrix of considerably finer austenite grains in comparison with the as-delivered original state. As a result of the final microstructural changes achieved, a 16.4% increase in abrasion resistance was obtained compared to the delivered condition.