The key to the understanding of the mechanical behavior of dual phase (DP) steels is to a large extent to be found in the microstructure. The microstructure is in its turn a result of the chemical composition and the process parameters during its production. In this thesis the connection between microstructure and mechanical properties is studied, with focus on the microstructure development during annealing in a continuous annealing line. In-line trials as well as the lab simulations have been carried out in order to investigate the impact of alloying elements and process parameters on the microstructure. Further, a dislocation model has been developed in order to analyze the work hardening behavior of DP steels during plastic deformation. From the in-line trials it was concluded that there is an inheritance from the hot rolling process both on the microstructure and properties of the cold rolled and annealed product. Despite large cold rolling reductions, recrystallization and phase transformations, the final dual phase steel is still effected by process parameters far back in the production chain, such as the coiling temperature following the hot rolling. Lab simulations showed that the microstructure and consequently the mechanical properties are impacted not only by the chemical composition of the steel but also by a large number of process parameters such as soaking temperature, cooling rate prior to quenching, quench and temper annealing temperature. Studying the behavior of DP steels under deformation it was observed that the plastic deformation proceeds inhomogeneously. This was taken into account when developing a dislocation model accurately describing the work hardening behavior for this type of steel. By fitting the dislocation model to experimental stress-strain data it is possible to obtain information about the material’s behavior, e.g. it was observed that only a fraction of the ferrite phase takes part in the initial plastic deformation, which explains the high initial deformation hardening rate in DP steels. Another finding was that the flow stress ferrite grain size sensitivity in DP steels is much larger than that in ferritic steels. Further, the deformation hardening part of the flow stress experiences a ferrite grain size dependence, which is in glaring contrast to that found for ferritic steels.