An excellent combination of elongation over 30% and high strength about 100kgf/mm2 is achieved in processing of a 0.4C-1.5Si-0.8Mn steel by intercritical annealing, rapid cooling into bainite transformation temperature to soak several minutes. This combination is caused by transformation induced plasticity of retained austenite. Sufficient amount of stable austenite is a requisite for the good ductility. For the rapid cooling after annealing, the soaking temperature for the best combination of strength and ductility is immediately above Ac₁. On the other hand, a delay before rapid cooling provides good properties if the soaking temperature is near Ac₃ and the subsequent cooling is performed at a lower rate before pearlite transformation; in this case the critical cooling rate is reduced. These phenomena are discussed in terms of the growth of ferrite and the diffusion of alloying elements inclusive of Mn during slow cooling.