Low carbon steel (AISI1020) strips with grain refinement were successfully produced by large strain extrusion machining (LSEM).A finite element simulation was performed to make comprehensible the deformation behavior of LSEM process. The influence of annealing temperature and annealing time on the microstructure and mechanical properties of strips was investigated by two sets of heat treatments and Vickers hardness test. As a result, strips can maintain high hardness under 400°C but start losing it as the temperature increased to 500°C and above. When annealED at 300°C for 1~9h, hardness of strips can maintain at almost the same level as that before annealing. Obvious hardening was found when annealing at 200~300°C mainly because of the dislocations atresia. Despite of the anneal-hardening behavior, these results indicated that the extruded AISI1020 strip has a good thermal stability at temperature below 400°C.