An investigation was made on the reverse transformation and the recrystallization behaviour of an austenitic stainless steel SUS 304. The stainless steel was annealed under several conditions of time and temperature after the formation of martensite phase, α', by cold rolling below the temperature of MD point. It was concluded that the reverse transformation and the recrystallization processes can be divided into five stages. It was also shown that the extremely fine microstructure with the grain size of about 1 μm is formed in the stainless steel annealed at 973 K for 1 h after the cold rolling at the reduction in area of 90%. The stainless steel with this hyperfine microstracture showed 609 MPa of the 0.2% proof stress, 852 MPa of the ultimate tensile stress and 40.8% of the total elongation at room temperature.