The dynamic recrystallization (DRX) behavior of SA508‐III steel, a critical material for reactor pressure vessels (RPVs) normally treated by hot forging, is thoroughly examined in this article. In the investigation, elevated temperatures and the coarsening of metallic phases and carbides are revealed to contribute to the degradation of the steel's strength–toughness relationship. Utilizing computational thermodynamics, the stability of secondary phases, including carbides and brittle inclusions, is simulated to enable precise phase equilibrium calculations and accurate prediction of key mechanical properties such as yield strength, tensile strength, and hardness. These simulations facilitated targeted modifications to the alloy composition to enhance the steel's strength and hardenability under high‐temperature, high‐pressure conditions. In this study, alloy composition and processing parameters within the CALculation of PHAse Diagram framework, utilizing the ThermoCalc and JMatPro software packages, are optimized. In the microstructural investigations conducted under various isothermal deformation conditions (1173–1473 K) and strain rates (0.001–1 s−1), it is demonstrated that DRX mechanisms led to varied grain size developments, with a critical strain rate identified at 0.01 s−1 during high‐temperature deformations. In these findings, significant insights are provided into optimizing the mechanical performance of SA508‐III steel for RPV applications.