Martensite-austenite (M/A) islands are typical in the quenched microstructure of Mn-Ni-Mo steel, frequently utilized for fabricating reactor pressure vessels (RPV). These islands can decompose into harmful long rod-shaped Fe3C carbides during tempering above 600°C, quantifying the negative effect of M/A island decomposition on mechanical properties and indicating a potential issue in RPV fabrication. To address this issue, the present study investigates a two-step tempering process on three different prior austenite grain size (PAGS) specimens (5 µm, 47 µm, and 119 µm). The effect of PAGS on M/A island decomposition characteristics during sub-600°C tempering and their impact on precipitated carbide morphology is investigated. A preliminary pre-tempering treatment at 200°C, 350°C, and 500°C for 2 hours was followed by a 3-hour final tempering step at 650°C. The findings revealed unique temperature-dependent decomposition characteristics of M/A islands. For example, at 200°C, partial M/A island decomposition took place, resulting in long rod-shaped carbides during final tempering. Meanwhile, the 350°C pre-tempering specimen revealed aggregated carbide precipitates of varying sizes in former M/A island locations. In contrast, the 500°C pre-tempering specimen showed coarse globular carbides and the absence of carbide precipitate clustering. This result can be attributed to the decrease in surface energy associated with the carbide-matrix interface as size increases. After tempering, all specimens produced three types of precipitates: rod-shaped Fe3C carbides, rhombus-shaped Mn7C3, and globular-shaped Mn23C6 carbides. The formation of long rod-shaped carbides during M/A island decomposition reduces the critical cleavage stress for micro-crack initiation, jeopardizing steel mechanical properties. Aggregated carbides cause the simultaneous formation of numerous micro-voids in close proximity, which eventually merge to form a large crack, resulting in material failure. When compared to other pre-tempered and directly tempered specimens, pre-tempering at 500°C produced the most favorable microstructure in terms of impact properties.