This article presents a study of changes in the microstructure of Hadfield steel depending on the tensile deformation and cold rolling with the strain/stress level. It has been established that the change in the “σ-ε” curve (at ε = 5%) is accompanied by a 1.5-times decrease in the strain-hardening coefficient. At ε = 0 to 5%, the structure contains dislocation loops, the interweaving of elongated dislocations, single-layer stacking faults. At ε = 5%, the structure contains multilayer stacking faults and mechanical microtwins. At ε > 5%, there is an intense microtwinning with no long dislocations and stacking faults. The most intense twinning develops in the range of deformation degrees of 5–20%, while the number of twins in the pack increases from 3–4 at ε = 10% to 6–8 at ε = 20%. When mechanical twinning is included, a cellular dislocation substructure begins to develop intensively. The cell size decreases from 700 nm at ε = 5% to 150 nm at ε = 40%. Twinning develops predominantly in systems with the largest Schmid factor and facilitates the dislocation glide. The results may be of interest to the researchers of the deformation processes of austenitic alloys.