Conventional coarse-grained (CG) biomedical austenitic stainless steel with grain size in the micrometer range was subjected to a novel phase reversion concept involving severe cold deformation, followed by annealing, when the cold deformed martensite reverts to austenite with grain size in the nanometer/ultrafine (NG/UFG) regime (~200–400 nm). The mechanical behavior of CG and NG/UFG steels was studied via load-controlled and displacement-controlled experiments using a nanoindentation technique with the aim to simulate micromotion. The plastic zone associated with the indentation-induced deformed region was characterized by post-mortem electron microscopy of the deformed region to elucidate the deformation mechanism. Nanoscale twinning was the deformation mechanism in steel with grain size in the NG/UFG regime, and contributed to the ductility of high strength steel. In contrast, strain-induced martensite contributed to the ductility of low strength CG steel with micrometer grain size. Interestingly, besides the differences in the mechanical behavior, the biological functions of the two steels were remarkably different. Higher cell attachment, proliferation and higher expression level of prominent proteins, fibronection, actin and vinculin were favored by a surface with grain size in the nanometer regime and was in striking contrast with the surface with micrometer grain size. This behavior is attributed to the differences in the fraction of grain boundaries that are high energy two-dimensional defects. The study advances our understanding of the mechanical behavior of biomaterials and their cellular functions.