In comparison with conventional production for hot strips, compact strip production (CSP) brings about some new microstructural phenomena. Investigations were carried out to clarify the grain refinement mechanism of low carbon steel strips produced by the EAF-CSP process. Samples, obtained from the same rolling stock during continuous rolling, were examined through SEM,TEM and XEDS. Thin slabs have a dominant columnar structure and the spacing of the secondary dendrite arms ranges from 90 to ~125 μm. The average grain sizes for the central area of the samples from the 1st to 6th pass are 41.6, 25.2, 21.4, 20.2, 13.1, 6.7 μm,respectively. Large number of nanometer oxide and sulfide have been found in the low carbon steel produced by the CSP process.The grain refinement mechanism can be summarized as follows: finer solidification structure of the thin slab; austenite recrystallization at higher temperature and stain accumulation at lower temperature caused by the great reduction of single rolling pass during continuous rolling; nano-scaled precipitates of sulfide and oxide which drag grain boundaries of austenite or ferrite to prevent the grain coarsening.