A duplex structure of δ-ferrite and lath martensite associated with thin-film retained austenite was developed by modifying the alloying addition process. The presence of δ-ferrite helped refine the grains of austenite formed by hot rolling. As a result, there was further increase in both the amount and stabilization of the retained austenite. It was confirmed that tempered martensite embrittlement originated from the decomposition of the retained austenite. Grain refining was also advantageous for reducing the severity of tempered martensite embrittlement, thereby postponing the onset of embrittlement to a higher tempering temperature. As a result of the uniform and small grains and the large amount of stable retained austenite, there was a further improvement in the excellent combination of mechanical properties. For the same tempering treatment, all the mechanical properties obtained in the as-rolled condition were better than those obtained by direct quenching without rolling. After hot rolling, however, the increase in hardness and tensile strength was not accompanied by any drop in the ductility and toughness.