The effect of Nb microalloying on microstructure evolution and mechanical properties of 0.02C–7Mn steel was investigated. The results showed that the microstructure was fully quenched martensite after subjected to reheating and quenching (RQ) process. The microstructure consisted of tempered α-martensite, reversed austenite (RA), and athermal ε-martensite after tempered at 620 °C, while the microstructure contained tempered α-martensite, RA, athermal ε-martensite, and athermal α-martensite after tempered at 650 °C. The thermal and mechanical stability of both RA and athermal ε-martensite decreased after the 0.05% Nb was added to the 0.02C–7Mn steel, and also decreased as the intercritical tempering (IT) temperature increased, which was mainly because the content of solid solution C in RA decreased. The calculated stacking fault energies (SFEs) were all negative, which spontaneously induced athermal martensitic transformation. Multiphase microstructure resulted in the remarkable mechanical property evolution. After tempered at 620 °C, the optical mechanical properties of 7Mn-0.05Nb steel were obtained: yield strength of 720.0 MPa, tensile strength of 819.0 MPa, total elongation of 26.0% and −40 °C impact energy of 266 J, while the yield strength of 675.0 MPa, tensile strength of 776.5 MPa, the total elongation of 29.5% and the −40 °C impact energy of 274 J appeared in 7Mn–0Nb steel. As the IT temperature increased to 650 °C, the yield strength of both the steels sharply decreased (475.5 MPa for 650 °C–0Nb steel and 460.5 MPa for 650 °C-0.05Nb steel), and the tensile strength of both the steels increased about 56 MPa, while the −40 °C impact energy decreased by 40 and 60 J, respectively, showing that the −40 °C impact energy was not very sensitive to the mechanical stability of RA and athermal ε-martensite. The mean size of NbC particles was mainly about 5–7 nm, which significantly improved the precipitation strengthening, but there was just little damage to low-temperature toughness.