Abstract: The deformation mechanisms of the multiple phases in low-carbon medium-Mn steel are the core to revealing the excellent strength and ductility combination. This study fabricated a novel low-carbon medium-Mn steel (Fe-0.085C-9.01Mn-1.04Si-2.83Al-0.03Nb) via hot rolling followed by intercritical annealing, analyzing and comparing the effect of austenite stability, tailored by the critical annealing process, on mechanical properties and deformation behavior. The results show that the specimen intercritical annealed at 670°C exhibits excellent mechanical properties: yield strength of 820 MPa, ultimate tensile strength of approximately 1100 MPa, total elongation of 42.25%, and product of strength and elongation exceeding 45 GPa·%, which is attributed to highly stable austenite (45%) and multi-phase structure with micro/nano features. Increasing the critical annealing temperature reduced austenite stability and promoted the formation of blocky austenite, which markedly altered the work-hardening behavior. The 670°C specimen, characterized by highly stable austenite and a lamellar multiphase structure, exhibited a stable and prolonged work-hardening stage. During deformation, the increased formation of fine stacking faults (SFs) and Lomer-Cottrell (L-C) locks in austenite, coupled with coordinated deformation between ferrite and austenite, contributed to excellent mechanical performance. In contrast, the 730°C specimen, containing predominantly less-stable blocky austenite, displayed deformation initially dominated by TRIP effect, leading to pronounced work hardening. The subsequent formation of multiple brittle martensitic phases in later deformation stages primarily caused the degradation in ductility. This work demonstrates that sustained work hardening through high-austenite stability and effective multi-phase coordination is a viable strategy for optimizing the strength and ductility of low-carbon medium-Mn steels.