Dynamic recrystallization (DRX) is an important grain refinement mechanism to fabricate steels with high strength and high ductility (toughness). The conventional DRX mechanism has reached the limitation of refining grains to several microns even though employing high-strain deformation. Here we show a DRX phenomenon occurring in the dynamically transformed (DT) ferrite, by which the required strain for the operation of DRX and the formation of ultrafine grains is significantly reduced. The DRX of DT ferrite shows an unconventional temperature dependence, which suggests an optimal condition for grain refinement. We further show that new strategies for ultra grain refinement can be evoked by combining DT and DRX mechanisms, based on which fully ultrafine microstructures having a mean grain size down to 0.35 microns can be obtained without high-strain deformation and exhibit superior mechanical properties. This study will open the door to achieving optimal grain refinement to nanoscale in a variety of steels requiring no high-strain deformation in practical industrial application.