A 0.2C-5Mn TRIP steel after cold rolling was intercritical annealed between 600 and 700 °C with different intercritical time, simulating a continuous annealing process line. Before annealing, the microstructure mainly consists of tempered martensite and large fraction of cementite. During annealing, martensite partially transforms to austenite, which may retain or transform to martensite after final cooling to room temperature, depending on its stability. With increasing the interitical annealing temperature and time, less cementite could be observed. The transformation of martensite to austenite with the dissolution of cementite was simulated using the DICTRA software. With increasing the annealing temperature from 650 to 700 °C, the time required to achive the optimal mechanical property is decreased. The optimal mechanical property was obtained after annealing at 675 °C for 5 min, with an ultimate tensile strength of 1000 MPa and a total elongation of 29%.