The plastic and fracture behavior of ultrafine-grained dual-phase (UFG-DP) steels (Fe-0.1 wt%C-3.5 wt%Mn) were analysed from the comparison with the coarser grained DP microstructures taken as references. The UFG-DP steel exhibits a superior balance between strength, uniform elongation and true fracture strain. The higher mechanical performance is explained by both a size effect and a relatively high Mn content in austenite which lead to a Transformation-Induced-Plasticity effect. Furthermore, the analysis shows that microstructure refinement significantly retards damage accumulation and modifies the dominant damage mechanism and fracture behavior. The analysis confirms that the present grade of ultrafine-grained DP steels is a serious candidate for automotive applications.