Cold rolling an Fe–1V–0·23C alloy containing ˜ 1 vol.-% of fine interphase V4C3 particles results in the formation of shear bands at rolling reductions greater than 20%. Although in general the dislocation distribution is homogenized by the presence of the particles, the shear bands provide potent sites for nucleation of recrystallization on subsequent annealing. In 60% cold-rolled samples, annealing at 706°C resulted in the onset of recrystallization within 15 min, but the recrystallization process was still incomplete after 1000 h. This is consistent with the exhaustion of shear-band and grain-boundary sites at a relatively small volume fraction of recrystallized grains, and the severe retardation of both nucleation and growth rates by the precipitate dispersion. The low rate of recrystallization is associated with the pinning effect of the V4C3 precipitates on boundaries of both recrystallized grains and subgrains. Coarsening of the pinning particles controls the rate of migration of the recrystallizing interfaces. Recovery is shown to occur simultaneously and competitively with recrystallization, and to reduce progressively the driving force for recrystallization. © 1982 The Metals Society.