The martensitic transformation, microstructural characteristics, and mechanical performance of modified ferritic heat-resistant steels under various austenitizing conditions were investigated by differential scanning calorimetry, microstructural examination, and mechanical tests. When the austenitizing temperature was as high as 1200 °C, a considerable amount of δ-ferrite formed, and the austenite grain size was seen to decrease. Higher austenitizing temperatures were found to promote martensite formation, but retard martensite growth, and the lath width increased as the austenitizing temperature increased. After tempering, rod-like and granular M23C6 carbides appeared within the tempered martensite, the average size and composition of which were dependent on the austenitizing conditions. When the austenitizing temperature was 1050 °C, granular MX with sizes less than 6 nm were identified in the δ-ferrite, while for other austenitizing temperatures, plate MX was inside the δ-ferrite. At 1200 °C, the length of the plate MX was as high as 100 nm, and the number density of plate MX decreased. The steel austenitized at 1150 °C exhibited the best tensile performance. It was found that the presence of a large amount of δ-ferrite would initiate cracking, thereby impeding the tensile strength.