The essential goal of this research is to evaluate the modification process on phase transformation, matrix chemical composition, and precipitated carbide types for modified SAE-AISI T1 steel and their effects on the hardness values after optimum heat treatment conditions. This research adopts the alloying design strategy to enhance one of the most important tools steel coded SAE-AISI T1 (T12001). Therefore, two alloying enhancement processes took place through partial or total tungsten replacement. Investigated steel was modified first through the addition of vanadium and then through the addition of vanadium and carbon. Substitute 5 wt modified SAE-AISI T1 steel. % tungsten with 1 wt. % vanadium, in addition to carbon content, varied from 0 to 1 wt. %. Therefore, to fulfill the goals of this work, Thermo-Calc software was utilized to get the following: (i) thermodynamic equilibrium information, (ii) the expected microstructure, (iii) the constituent volume fraction, and (iv) carbide chemical composition. The chemical composition of the expected phases was confirmed by scanning electron microscopy (SEM) equipped with energy-dispersive X-ray (EDX). In addition, volume fractions of different constituents were estimated by using Thermo-Calc software and authenticated by the imaging analysis process. The experimental findings for the variations in the chemical composition of the matrix and eutectic carbides precipitated, e.g., MC and M6C carbides, agree well with the calculated findings. Tungsten replacement by vanadium with and without extra carbon at traditional SAE-AISI T1 steel encourages MC carbide formation instead of M6C, M23C6, and M7C3 carbides. MC carbide precipitated in vanadium with extra carbon-modified steel contains more carbon, chromium, and tungsten but less vanadium compared with vanadium-modified steel. Vanadium with extra carbon-modified steel precipitated more M6C carbide and gamma-austenite. Hardness measurements emphasized that modified steel is a promising material for its use as a tooling material with low tungsten content and, in turn, produces cutting-tool materials with economical cost.