Metastable austenitic stainless steel of type AISI 304L was cold rolled to 90% with and without inter-pass cooling. Inter-pass cooling produced 89% of strain-induced martensite whereas no inter-pass cooling resulted in the formation of 43% of martensite in the austenite matrix. The cold-rolled specimens were annealed at various temperatures in the range of 750-1000 A degrees C. The microstructures of the cold-rolled and annealed specimens were studied by the electron microscope. The grain size and low angle boundaries were determined from the orientation maps recorded by the scanning electron microscope-based electron backscattered diffraction technique. The observed microstructural changes were correlated with the reversion mechanism of martensite to austenite and volume fraction of martensite. It was noted that large volume fractions of martensite at low annealing temperatures, below 900 A degrees C, were most suitable for the formation of fine grains. On the contrary, reversion of small volume fractions of martensite at critical annealing temperature of 950 A degrees C resulted in grain refinement.