In situ high-energy X-ray diffraction during tensile loading has been used to investigate the evolution of lattice strains and the accompanying strain-induced martensitic transformation in cold-rolled sheets of a metastable stainless steel. At high applied strains the transformation to alpha-martensite occurs in stepwise bursts. These stepwise transformation events are correlated with stepwise increased lattice strains and peak broadening in the austenite phase. The stepwise transformation arises from growth of alpha-martensite embryos by autocatalytic transformation.