Fe-Mn-Al steels with low density have the potential to substitute for TRIP (transformation induced plasticity) steels. For the development of Fe-Mn-Al TRIP steels, phase transformations play an important role. Our methods of studying the phase transformations of the Fe-16.7 Mn-3.4 Al (wt%) austenitic steel include heating and cooling. We have studied the martensitic transformation of the ternary Fe-Mn-Al steel. Single austenite phase is the equilibrium phase at 1373 K, and dual phases of ferrite and austenite are stable at low temperatures. It is noteworthy that lath martensite forms in the prior austenite grains after cooling from 1373 K via quenching, air-cooling, and/or furnace-cooling. The crystal structure of the martensite belongs to body-centered cubic. The formation mechanism of the ferritic martensite is different from the traditional martensite in steels. Ferrite is the stable phase at low temperature.