The deformation behaviours of two steel matrix composites (SMCs) strengthened by different volume fractions of the TiB2 ceramic phase were investigated in this work. When the volume fraction of TiB2 was increased from 9 vol% to 13 vol%, the SMC exhibited an unexpected decrease in tensile strength but an improvement in ductility. Thorough experimental investigations based on in-situ and ex-situ microstructural analyses were conducted to reveal the underlying mechanisms. These showed that increasing the volume fraction of TiB2 inevitably led to more primary TiB2 particles with larger sizes and considerable interfacial voids as a result of the hot rolling used in the preparation of the SMC. The primary TiB2 particles were prone to premature fracture owing to higher stress concentrations, and interfacial voids could accelerate the process of microcrack formation and coalescence, leading to a decrease in tensile strength. Such a decrease in the tensile strength of the TiB2-13 vol% SMC was also attributed to the hardness of the ferrite matrix resulting from its low porosity and large secondary phase content. In terms of ductility, the TiB2-13 vol% SMC outperformed the TiB2-9 vol% SMC because the former possessed cleaner ferrite surrounding the primary TiB2 particles.