Micro-alloyed medium-carbon steel is increasingly used as a cost-effective alternative to quenched and tempered steel in the production of half-shaft components. Current research emphasizes controlling the microstructure during thermomechanical processing to achieve the desired structural properties after cooling. This study investigated the effect of continuous cooling transformation on the microstructure and mechanical properties of micro-alloyed medium-carbon steel. At a cooling rate of 0.5 °C s−1, only pearlite transformation occurred. At rates between 1 °C s−1 and 8 °C s−1, both bainite and martensite transformations were observed, while only martensite formed at rates exceeding 12 °C s−1. Subsequently, a four-factor, three-level orthogonal experiment was designed based on the actual production process for half shafts. The optimal forging parameters were identified as a heating temperature of 1000 °C, a deformation temperature of 920 °C, a deformation extent of 15%, and a cooling rate of 0.5 °C s−1. The study offered solutions to enhance microstructural uniformity and effectively manage abnormal bainite and martensite formations, thereby establishing a foundation for the high-quality application of micro-alloyed medium-carbon steel in half-shaft components.