Lath martensite formed in low carbon steels plays a crucial role in the mechanical properties of heat-resistant steels containing approximately 0.1 mass%C. Lath martensite exhibits a hierarchical microstructure comprising packets, blocks and laths. Martensitic transformation is the phase transformation accompanying ordered shear deformation without atom diffusion. The hierarchical microstructure is formed as a result of the relaxation of the strain energy caused by the deformation; however, to the best of our knowledge, the formation mechanism of this microstructure has not been understood thus far. In this paper, the experimental results and phenomenological formation mechanism reported thus far are reviewed, and a new mechanism (including two types of slip deformation (TTSD) model) is introduced, which is constructed by independently considering two kinds of slip deformations using the slip deformation model proposed by Khachaturyan. In addition, the TTSD model allows for the simulation of the martensite phase formation by the phase-eld method. Furthermore, the TTSD model permits the prediction of lath martensite features including the existence of sub-blocks and high density of dislocations in lath. In particular, the presence of laths in a block structure is clearly explained by the TTSD model for the rst time.