In this study the key factors in the creation and coalescence of strain localization regions in dual-phase steels were investigated. An in-situ tensile setup was used to follow the microscopic deformation of ferrite phase inside the microstructure of DP600 steel. The test was continued until the specimen was very close to final failure. The captured scanning electron microscopy (SEM) micrographs enabled us to directly observe the evolution of deformation bands as a contour of strain distribution in the ferrite matrix. Furthermore, the microscopic deformation behavior of DP600 dual phase (DP) steel under equi-biaxial loading was investigated. A biaxial in-situ test setup was designed and employed inside a scanning electron microscope. Using the digital image correlation method, the ferrite microscopic strains were quantified in the captured micrographs. The SEM image that was captured during the in-situ tensile test was further used in a finite element dislocation density model, based on which the similarities and differences between the experimental and simulation results were discussed. A parametric study was then performed to gain deeper insights on the effect of martensite grain size on the strain localization of the neighboring ferrite. Furthermore, using the experimental results, the localization of strain inside the high deformational fields before the final failure was discussed. The behavior of voids and initial defects inside the localization bands was also studied. The results revealed important deformational characteristics of the microstructure at the microscopic level. Also, the formation and coalescence of deformation bands inside the microstructure under the biaxial loading was studied. Furthermore, to clarify the differences between uniaxial and biaxial stretching, the effects of biaxial loading on damage mechanisms of DP steels were discussed. Keywords: Micromechanics; dual phase steel; in-situ testing; plastic strain localization; biaxial loading