This study presents processing and properties of dual-phase (DP) steels, which contain islands of martensite among ferrite grains effectively reinforced by abundant carbide particles. To this end, a medium-carbon, low-alloyed steel plate with an initial ferrite-pearlite microstructure underwent cold rolling for 80% thickness reduction. Specimens obtained from the cold rolled strip were then heated in a neutralized salt bath at various temperatures ranging from 600 to 730 °C for 10 ks, followed by water quenching. The resulting microstructures and mechanical properties were analyzed. Preceding the formation of austenite during intercritical annealing, recrystallization led to the formation of a spheroidized ferrite microstructure with a high number of carbide particles dispersed mainly within the recrystallized ferrite grains. Initially, austenite grains formed on the carbides located at the boundaries between ferrite grains, followed by the formation of austenite on the carbides still present within the ferrite grains. Quenching from 715 °C resulted in a DP microstructure with intergranular martensite while increasing the annealing temperature to 725 °C led to the creation of intragranular martensite additionally. The study also focused on the distribution of alloying elements in the DP microstructure, revealing an enrichment of carbides with Mn, Cr, and Mo. Furthermore, an enrichment of martensite islands with manganese atoms was identified, but no comparable enrichment with carbon atoms was observed. The specimens annealed at 715–725 °C, which consisted of a martensite volume fraction ranging from 0.15 to 0.45, exhibited a superior balance of strength and ductility, as well as an outstanding work hardening exponent.