The reverse martensitic transformation in cold-rolled metastable austenitic stainless steel has been investigated via heat treatments performed for various temperatures and times. The microstructural evolution was evaluated by differential scanning calorimetry, X-ray diffraction and microscopy. Upon heat treatment, both diffusionless and diffusion-controlled mechanisms determine the final microstructure. The diffusion reversion from alpha '-martensite to austenite was found to be activated at about 450 circle C and the shear reversion is activated at higher temperatures with A(f)' similar to 600 circle C. The resulting microstructure for isothermal heat treatment at 650 circle C was austenitic, which inherits the alpha '-martensite lath morphology and is highly faulted. For isothermal heat treatments at temperatures above 700 circle C the faulted austenite was able to recrystallize and new austenite grains with a low defect density were formed. In addition, carbo-nitride precipitation was observed for samples heat treated at these temperatures, which leads to an increasing M(s)-temperature and new alpha '-martensite formation upon cooling.