An ultrafine-grained dual phase (DP) microstructure has been produced in a steel that contains a combination of composition and deformation gradients. A carbon gradient was created by controlled decarburization of the steel. The compositionally graded steel was cold rolled to produce a large number of shear bands prior to recrystallization annealing at 650 °C for 5 h followed by intercritical annealing at 740 °C for 10 min. Microstructural characterization reveals a very fine heterogeneous dual phase microstructure with submicron grains appearing along the traces of the prior shear bands that had developed during rolling. Martensite volume fraction changes from the surface to the center and also within these shear band traces. Tensile tests of the new dual phase structure reveal that the work hardening rate changes spatially with martensite volume fraction. Detailed fractography using ex-situ X-ray computed tomography (XCT) reveals a unique form of multiple cup and cone fracture features that can be related to the evolution of damage along the shear band traces with a gradient of void density from the surface to the center. This strategy for fabricating dual phase steels enables the development of architectured ultra-high strength DP steels with different properties that can be tailored by controlling the composition and deformation gradients and subsequent annealing treatments.