TC18 titanium alloy was subjected to hot rolling at 840 °C, followed by annealing experiments at 830, 860, and 890 °C for different time lengths. The effects of annealing temperature and time on phase transformation and static recrystallization (SRX) behavior, as well as the interaction between phase transformation and SRX, were studied. The results showed that at the low annealing temperature of 830 °C, the microstructure underwent β → α phase transformation and α grain growth with the increase of annealing time, and the SRX of β phase proceeded through subgrain nucleation mechanism induced by α particles. At the middle annealing temperature (860 °C), the α → β phase transformation occurred before the SRX of β phase, and the SRX of β phase was dominated by the grain boundary (GB) bulge mechanism. Meanwhile, the reduction of α phase content accelerated the SRX rate and grain growth. As the annealing temperature (890 °C) exceeded the β transus temperature, the α phase completely transformed to the β phase, and the SRX of the β phase proceeded with a very fast grain growth rate. In addition, the interaction between phase transformation and SRX affected the distribution of α particles. The large-sized α particles (830 °C) were located at the triple GB junction and hindered the SRX β grain growth, while smaller α particles (860 °C) were bypassed by β GB and dispersed within the SRX β grains.