Deformation-induced retained austenite to martensite transformation is often regarded as the main contribution to the TRIP (transformation induced plasticity) effect. In this work, the transformation in an aluminum-bearing TRIP steel, 0.17C-1.46Mn-0.26Si-1.81Al (wt.%), is studied by means of in situ X-jay diffraction (XRD) measurements performed during uniaxial straining. The XRD patterns are analyzed by profile fitting and important information with respect to martensitic transformation under stress is revealed: presence of phases, volume fraction of retained austenite, lattice spacing and dislocation density. It is found that the volume fraction of retained austenite decreases with increasing strain according to a hyperbolic relation previous proposed in the literature. Inhomogeneity of carbon concentration over the austenitic phase is suggested as the major factor controlling the degree of the transformation in comparison with dislocation density in the ferrite matrix.