An Fe–0.26C–1.96Si–2Mn with 0.31Mo (wt%) steel was subjected to a novel thermomechanical processing route to produce fine ferrite with different volume fractions, bainite, and retained austenite. Two types of fine ferrites were found to be: (i) formed along prior austenite grain boundaries, and (ii) formed intragranularly in the interior of austenite grains. An increase in the volume fraction of fine ferrite led to the preferential formation of blocky retained austenite with low stability, and to a decrease in the volume fraction of bainite with stable layers of retained austenite. The difference in the morphology of the bainitic ferrite and the retained austenite after different isothermal ferrite times was found to be responsible for the deterioration of the mechanical properties. The segregation of Mn, Mo, and C at distances of 2–2.5 nm from the ferrite and retained austenite/martensite interface on the retained austenite/martensite site was observed after 2700 s of isothermal hold. It was suggested that the segregation occurred during the austenite-to-ferrite transformation, and that this would decrease the interface mobility, which affects the austenite-to-ferrite transformation and ferrite grain size.