High-nitrogen austenitic steel (HNS) cold-rolled with a reduction rate of 25% was subjected to an investigation of the effect of annealing temperature on microstructural evolution, tensile properties and the variation in fracture surface morphology. In cold-rolled HNS, matrix recovery occurred at an annealing temperature of 600 °C, and recrystallization was locally initiated at an annealing temperature of 800 °C. The 0.2% offset yield strength (0.2% YS) and ultimate tensile strength (UTS) were almost constant up to an annealing temperature of 500 °C, and these values gradually decreased above the annealing temperature of 600 °C, while a sharp reduction in the percentage reduction in area (RA) occurred at the annealing temperatures of 600 and 700 °C due to Cr2N precipitation along the grain and twin boundaries. The ratio of 0.2% offset yield strength to ultimate tensile strength (0.2% YS/UTS) remained constant until matrix recovery took place; however, once recrystallization occurred, the ratio decreased significantly. Furthermore, the variation in the morphology of Cr2N along the grain boundaries in the annealing temperature range from 600 to 800 °C influenced the intergranular fracture morphology, resulting in a transition from dimple to ledge and back to dimple.