Plastic deformation at room temperature, and the proceeding heat treatments, are important processes for optimizing the microstructure and mechanical properties of austenitic stainless steel. The microstructure and mechanical properties of cold-drawn 304 austenitic stainless steel wire were investigated after annealing at 700 and 800 °C, with different times (20, 40 and 60 min) and drawing strain (0.4, 1.0 and 1.5). Electron backscattered diffraction (EBSD) techniques, trans-mission electron microscope (TEM) analysis, differential scanning calorimeter (DSC) and tensile tests were performed in order to study the microstructure evolution and mechanical properties during different annealing processes for the 304 austenitic stainless steel wire. The results showed that the quantity of α’ martensite and dislocations increased with an increase in the strain, which means that, while the ultimate tensile strength of the cold-drawn wires elevated, the elongation reduced. The mechanical properties of stainless steel wires also varied with the evolution of martensite transformation characteristics, density of stacking fault, dislocation and twin, as well as the recrystallization degree under various annealing conditions. The recrystalli-zation temperature of steel wire was mainly determined by the magnitude of the strain, while the martensite reversal temperature was determined by the stacking fault energy and the de-formation value. The temperature of recrystallization and martensite reverse in steel wire de-creased with the increment of the strain. The balance of tensile strength and elongation of steel wire can be obtained by adopting the proper annealing process combined with cold-drawing deformation. In this paper, we showed that a good combination of strength and elongation in 304 austenitic stainless steel can be obtained with a strain of 1.5 annealed at 800 °C for 20 min.