Abstract: Tensile deformation and microvoid formation of quenched and tempered SA508 Gr.3 steel were studied using an in-situ digital image correlation technique and in-situ electron backscatter diffraction (EBSD) measurements. The quenched steel with a mixture of upper bainite and granular bainite exhibited a high ultimate tensile strength (UTS) of ~795 MPa and an elongation of ~25%. After tempering, long-rod carbides and accumulated carbide particles were formed at the interface of bainite–ferrite subunits and prior austenite grain boundaries (PAGBs), respectively. The UTS of the tempered steel decreased to ~607 MPa, whereas the total elongation increased to 33.0% with a local strain of 191.0% at the necked area. In-situ EBSD results showed that strain localization in the bainite–ferrite produced lattice rotation and dislocation pileup, thus leading to stress concentration at the discontinuities (e.g., M–A islands and carbides). Consequently, the decohesion of PAGBs dotted with M–A islands was the dominant microvoid initiation mechanism in the quenched steel, whereas microvoids primarily initiated through the fracturing of long-rod carbides and the decohesion of PAGBs with carbides aggregation in the tempered steel. The fracture surfaces for both the quenched and tempered specimens featured dimples, indicating the ductile failure mechanism caused by microvoid coalescence.