Solid state reactions taking place during annealing of 20% cold rolled ferrite–austenite duplex stainless steel (DIN W.-Nr: 1.4462) have been studied by means of several complementary techniques: optical, scanning and transmission electron microscopy, X-ray diffraction analysis, microhardness and ultramicrohardness measurements and magnetic phase detection (ferritoscope). It has been found that after cold rolling austenite exhibited more strain hardening and a higher driving force for recrystallization than ferrite. Extensive recovery took place in ferrite during annealing, while the deformation substructure of austenite remained nearly unrecovered until beginning of recrystallization. The recrystallization kinetics in ferrite was faster than in austenite. Recrystallization in austenite occurred in a more discontinuous manner than in ferrite. The eutectoid transformation of ferrite to sigma phase plus austenite slowed down recrystallization kinetics of both ferrite and austenite phases. A scheme is presented for sigma phase formation during recrystallization annealing.