Ultrafine‐grained (UFG) dual‐phase (DP) AISI 5115 steel containing 0.12 wt% Ti is developed using thermomechanical treatment of cold rolling and intercritical annealing. The aim is to investigate the effect of intercritical annealing time on microstructural changes, mechanical properties, and fracture behavior. The results show that, with increasing intercritical annealing time up to 8 min, the martensite island size and the martensite volume fraction increase, whereas the ferrite grain size is not changed. Significant TiC precipitation is found inside the ferrite grains that retards grain growth during annealing. The yield strength (YS) and ultimate tensile strength (UTS) of the UFG DP steels are enhanced by increasing the martensite volume fraction, while slightly attenuated by enlarging the size of martensite islands. A suitable combination of strength and ductility is obtained in terms of the amount of energy absorbed for UFG DP steels (UTS × UE > 160 MPa%) compared with the coarse‐grained DP steel (≈100 MPa%). The fracture mechanism of the UFG DP steel is ductile in which increasing annealing time results in a smaller average diameter of the dimples.