This study reveals a previously unreported transformation pathway governing austenite evolution during slow continuous heating of cold-rolled medium-Mn steel (Fe-0.4C-6Mn-2Al-1Si-0.05Nb, wt.%). Using a correlative approach combining in-situ high-energy X-ray diffraction, electron microscopy, atom probe tomography, and DICTRA simulations, we demonstrate that introducing a considerable amount of pre-existing austenite (gamma(pre)) at the onset of the intercritical annealing region is beneficial for microstructural control which acts as both a solute reservoir and a structural template for the formation of newly formed austenite (gamma(new)). Upon heating between 500 and 800 degrees C, fine (Fe, Mn)-rich carbides precipitate from gamma(pre), serving as heterogeneous nucleation sites for gamma(new) while concurrently depleting C and Mn from gamma(pre). The subsequent dissolution of these carbides above similar to 660 degrees C releases solutes into the surrounding matrix, driving localized partitioning and stabilizing gamma(new). This process results in a bimodal microstructure comprising elongated, low-alloy gamma(pre) and blocky, high-alloy gamma(new) embedded in a submicron ferritic matrix. At higher temperatures, solute dilution reduces austenite stability. A retained austenite of 55 vol% was achieved at 780 degrees C, consistent with thermodynamic predictions without prolonged isothermal holding. These findings establish the controlled decomposition-reconstruction of gamma(pre) into gamma(new) as a viable strategy for tailoring austenite morphology and chemistry, enabling efficient stabilization of high retained austenite amounts in medium-Mn steels while minimizing alloying requirements.