For the first time, deformation twinning and martensitic transformation were observed in retained austenite in a low-alloyed transformation-induced plasticity steel using nanoindentation in conjunction with electron backscattering diffraction and transmission electron microscopy. Dislocation glide, martensite formation and deformation twinning were correlated to pop-ins and deviation from linearity in the load-displacement curve. Deformation twinning was found to enhance the stability of retained austenite. This observation furthers our understanding of RA stability during straining of low-alloyed multiphase TRIP steel.