Microstructure development in an interstitial–free steel during cold rolling at low strain levels (ϵ≤ 9.8%) has been investigated by using transmission electron microscopy. At a strain of 2.2%, {112} slip systems operate in addition to {110} slip planes. Dislocation reactions occur at this stage to produce immobile 100 segments in the scissors configuration and these segments are also found at higher strain in the dislocation walls of microbands. The formation of microbands starts at small reductions (ϵ∼6.7%), and microbands are of lenticular shapes and have habit planes running approximately parallel to {110} planes. Two sets of dislocations comprise the microband walls; one is predominant and has its Burgers vector lying on the microband9s habit plane. The secondary set is much less dense, and its slip plane is not coplanar with the microband habit plane. A considerable misorientation exists between the inner region of a microband and either of its two neighbouring matrices, rather than between the two matrices, which is consistent with Jackson9s double cross–slip model. However, the growing end of a microband indicates the splitting of a dense dislocation sheet. In the specimen that was rolled to ϵ=9.8%, some grains contain one or two sets of microbands, while some are microband–free. The crystallographic measurement and deformation geometry calculation reveal that the habit plane of an observed microband has the largest Schmid factor; and when one 〈111〉 slip direction is intensively activated in this plane, one set of microbands is formed on this plane. Two sets of microbands form if two 〈111〉 slip directions have high and nearly equal shear stresses. In the case of microband–free crystals, up to seven slip systems have similar Schmid factors and thus are activated concurrently. This leads to homogeneous deformation and as a result, no microbands form. Based on these results, a new mechanism is proposed for microband formation involving double cross–slip, dislocation wall splitting and dislocation exchange between the walls.