The third-generation advanced high strength medium manganese steels aim at high-performance automobile sheet steel applications. Micro-alloying of steels is considered an effective method to enhance mechanical properties through grain refinement and precipitation hardening. However, in the context of cold-rolled, intercritically annealed medium-manganese steels, the effect of micro-alloying is not well understood. In the present work, we studied the influence of 0.06 wt.% Nb micro-alloying in medium manganese steel of composition 10Mn-0.05C-1.5Al (wt.%). Firstly, using atom probe tomography we discuss the mechanism of NbC precipitation. Subsequently, the effect of NbC precipitation on the driving force for austenite nucleation is explained. We observe that the NbC precipitation pins the austenite-ferrite phase boundary during austenite growth, and the corresponding Zener pinning force was calculated. Furthermore, the energy dissipation during phase boundary migration caused by intrinsic friction and solute drag effect was discussed. These forces hindering the austenite growth were then compared with the chemical driving force for phase transformation. Lastly, the mechanical properties of the NbC microalloyed steels were explained based on the effect of NbC precipitation on austenite nucleation and growth.