The strain-rate-dependent deformation behavior of an intercritically annealed X6MnAl12-3 medium-manganese steel was analyzed with respect to the mechanical properties, activation of deformation-induced martensitic phase transformation, and strain localization behavior. Intercritical annealing at 675 °C for 2 h led to an ultrafine-grained multi-phase microstructure with 45% of mostly equiaxed, recrystallized austenite and 55% ferrite or recovered, lamellar martensite. In-situ digital image correlation methods during tensile tests revealed strain localization behavior during the discontinuous elastic-plastic transition, which was due to the localization of strain in the softer austenite in the early stages of plastic deformation. The dependence of the macroscopic mechanical properties on the strain rate is due to the strain-rate sensitivity of the microscopic deformation behavior. On the one hand, the deformation-induced phase transformation of austenite to martensite showed a clear strain-rate dependency and was partially suppressed at very low and very high strain rates. On the other hand, the strain-rate-dependent relative strength of ferrite and martensite compared to austenite influenced the strain partitioning during plastic deformation, and subsequently, the work-hardening rate. As a result, the tested X6MnAl12-3 medium-manganese steel showed a negative strain-rate sensitivity at very low to medium strain rates and a positive strain-rate sensitivity at medium to high strain rates.