The role of parameters such as strain, strain rate, temperature, and nitrogen content in the formation of deformation bands in SS 316LN during hot working is discussed. The study was carried out using two variants of SS 316LN. The effects of deformation parameters on band formation were studied by conducting deformation experiments under compression loading at temperatures of 1123 K to 1473 K and strain rates of 0.01 s−1, 1 s−1, and 10 s−1. It was observed that, for deformation at low temperature and high strain rate, there exists a strain beyond which the localized flow manifests as deformation bands. The intensity of these deformation bands depends on temperature. Their intensity reduces with increase in temperature due to the improved thermal conductivity of the material. High deformation rate and high nitrogen content tend to assist deformation band formation. On the basis of microstructural analysis, a mechanism for deformation band formation is proposed.