The effect of low temperature magnetic tempering on carbide precipitation in a medium carbon steel, 42CrMo, has been investigated. As-quenched steel specimens were tempered at 200°C for 60 min without and with a 14-T magnetic field. Results show that under the magnetic field processing there forms the relatively high-temperature monoclinic χ-Fe₅C₂ carbide with a denser distribution and smaller sizes, as compared to the usual orthorhombic η-Fe₂C carbide obtained without the magnetic field. The impact of the external magnetic field refers to a change in the precipitation sequence of the transition carbides by effectively lowering the Gibbs free energy of the high magnetization phases. The denser distribution and smaller size of χ-Fe₅C₂ precipitates are attributed to the increased nucleation rate and the weaker diffusion capacity required for growth as the formation temperature is lower. This offers additional dispersion strengthening to compensate for the decrease in strength and hardness due to the loss of supersaturation of carbon atoms in the matrix and raises the toughness of the steel.