UF340 is a new type of cold-rolled fine grain high-strength steel with excellent formability developed by Shougang Co., Ltd Company. In this paper, the formation mechanism of recrystallisation texture of UF340 during annealing at 720 °C were systematically investigated. The as-received cold rolled sheet displayed a pronounced α-fiber texture together with a weak γ-fiber texture. With increasing annealing time, recrystallization occurred in the elongated grains, γ-fiber texture grains generated and grew up gradually. The texture component of the original α-fiber grains shift toward {112} <110>, {023} <100>, {223}<352> and finally {111} <112>. High r-values of UF340 in all directions were achieved by the development of the remarkable γ-fiber texture. In addition, the
r
¯
value of the annealed UF340 was as high as 1.96, and the Δr value was only 0.2. As a result, excellent deep drawability and relatively high strength of UF340 were realized simultaneously, making it one of the ideal materials for automobile outer panels.