Heat treatment conditions and the formation of microstructures were studied for improving the transformation-induced plasticity(TRIP) effect of retained austenite and mechanical properties of Fe-0.2%C-1.5%Si-1.5%Mn sheet steel. An excellent combination of elongation about 30% and high strength over 760MPa was achieved by processing of intercritical annealing and isothermal holding Intercritical annealing the sheet steel produced fine particles($1{sim}2{mu}m$) of retained austenite which were stabilized due to C enrichment by subsequent holding in bainite transformation range. Heat treatment conditions were depended on the shape and distribution of second phases as well as the volume fraction and stability of retained austenrte. In this work, the heat treatment condition of optimal strength-elongation balance was obtained by holding the steel at $400^{circ}C$ for 200sec, after intercritical annealing at $790^{circ}C$ for 300sec.