Work-hardening behavior of a lath martensitic Fe–18Ni alloy during tensile deformation is discussed based on the Taylor's equation. The dislocation characteristics are monitored using in situ neutron diffraction. In the specimens of as-quenched (AQ) and tempered at 573 K (T573), the dislocations are extremely dense and randomly arranged. The dislocations in AQ and T573 form dislocation cells as deformation progresses. Consequently, a composite condition comprising cell walls and cell interiors is formed, and the coefficient α in the Taylor's equation increases. Cells are already present in the specimen tempered at 773 K (T773), which has a low dislocation density and a large fraction of edge-type dislocations. As deformation continues, the dislocation density of T773 increases, its cell size decreases, and its composite condition become stronger. Simultaneously, the edge-type dislocation fraction decreases, keeping α unchanged. Thus, both the dislocation arrangement and character affected α, thereby affecting the work-hardening behavior.