It is well established that dipolar interactions in colloidal magnetic fluids are the mechanism of the pattern formation such as chains or columns. We report the first observation of structure formation in steels exposed to a magnetic field. A magnetic field higher than 2T is found to align the microstructure of steels parallel to the field during the transformation from the paramagnetic fcc phase to the ferromagnetic bcc phase and vice versa. Evidence is presented for the dipolar interactions between the ellipsoidal nuclei in the background of the matrix with a different magnetic character. Electron back scattering diffraction has revealed that the transforming nuclei in a magnetic field arc at random in their crystallographic orientation. (C) 2002 Elsevier Science B.V. All rights reserved.