Low-carbon dual-phase (DP) steels composed of ferrite and martensite are widely used in automotive industries due to their good combination of strength and ductility and remarkable strain-hardening ability. Such exceptional mechanical properties of DP steels arise from microstructural deformation heterogeneity due to the different deformation roles of soft ferrite and hard martensite. The present study investigated mechanical properties and local deformation behavior of DP steels having different martensite hardness (strength) using digital image correlation (DIC) technique and in-situ X-ray diffraction (XRD) experiment during tensile deformation. The martensite hardness was reduced by tempering treatment, and its mechanical properties were compared with the as-quenched DP specimen by tensile testing. The tempered DP specimen exhibited reduced strength but enhanced ductility, especially in post-uniform elongation, compared to the as-quenched DP specimen. DIC-strain analysis indicated that the tempering effectively inhibited strain localization, allowing a greater contribution of martensite to plastic deformation. On the other hand, the in-situ XRD analysis revealed that the tempering significantly restricted the stress-increasing potential of martensite. Our results suggest that martensite, acting as a hard domain, plays a significant role in enhancing strain-hardening ability and achieving large uniform elongation due to its high stress-increasing potential. However, the presence of hard martensite also imposes restrictions on post-uniform elongation due to the strong strain localization induced in microstructures.