First, at large strains the carbide phase dissolves via mechanical alloying, rendering the initially two-phase pearlite structure into a carbon-supersaturated iron phase. This carbon-rich iron phase evolves into a columnar nanoscaled subgrain structure which topologically prevents grain boundary sliding. Second, Gibbs segregation of the supersaturated carbon to the iron subgrain boundaries reduces their interface energy, hence reducing the driving force for dynamic recovery and crystal coarsening. Thus, a stable cross-sectional subgrain size < 10 nm is achieved.