Ultrahigh strength can be obtained by cold drawing of high-carbon steel wire, but the strength heavily relies on the extent of cold-drawn deformation and it is difficult to produce ultrahigh strength steel wire with large diameter. In this study, a new method by combination of cold-drawing and martensitic transformation was reported to significantly improve the strength of cold-drawn steel wire. By using the new method, the strength of the steel wire can be increased to over 2.4 GPa, which is much higher than its corresponding original cold-drawn wire (less than 2.0 GPa), while sacrificing only a small ductility. By using electrochemical etching, transmission electron microscopy and X-ray diffraction, the prior austenite grain size and the microstructure of the martensitic steel wires was analysed. After the heat treatment, the large cold deformed steel wire with 8 pass drawing displays grains of 4.9 μm and dislocation-substructured martensite; while the small cold deformed wire with 6 pass drawing results in coarser grains and a mixture substructure of dislocation and twin in martensite. The results demonstrate that the extent of cold-drawn deformation has a great influence on grain refinement in the later heat treatment; grain refinement to less than 5 μm will lead to martensite substructure transition from twin to dislocation, and thus endows the martensitic steel wire moderate ductility. In addition, calculation indicates that precipitate hardening and dislocation strengthening contribute about 76.9% to the yield strength, and martensite lath boundary strengthening contributes about 18% to the yield strength.