Five different grain sizes are produced in 0.17 wt% carbon steel using varying rates of cooling from austenitization temperatures. Controlled furnace cooling from 1100 °C and 950 °C produces coarse ferrite grains of 40 µm and 32 µm diameter, respectively, along with partial degeneration of cementite lamellae within pearlite regions. Execution of intermediate (oven at 300 °C) and fast (air) cooling from 950 °C develops finer polygonal ferrite (19 µm and 14 µm) with increased degeneration of pearlite; while repeated heating and force air cooling around 950 °C produces a minimum ferrite grain size of 9 µm and complete degeneration of the pearlite regions. Influence of micro-alloying is observed by precipitation of fine carbides in grain-refined structures. Tensile test results show improvement in strength values and ductility parameters with the progress of grain refinement. By comparing the improved yield strength values with the classic Hall–Petch relation: σ=σi+Kd−1/2, a deviation is observed in the exponent of grain size. Lüders strain becomes larger with decrease in ferrite grain size. The flow curves and strain hardening exponents as derived for different grain sizes show increasing plasticity with grain refinement. Rate of strain hardening also becomes higher with grain refined structures. Ferrite grain refinement results in a dominating inter-crystalline mode of tensile fracture.