Since “Advanced High Strength Steels” (AHSS) meet the partly contradictory demands of the automotive industry regarding increased strength to improve crash safety along with weight reduction, their application gains in importance. Currently, the third generation of AHSS is under development which contains an increased fraction of retained austenite in a matrix of bainite or martensite. The objective of the present study was a detailed description of the complex microstructural features of a carbide-free bainitic steel and an evaluation of the influence of the isothermal transformation temperature on the microstructure and the resulting mechanical properties. It was found that holding temperatures close to the martensite start temperature result in a balanced combination of strength and ductility. A prolonged holding time at these temperatures causes a morphology change of the austenite which is accompanied by carbon redistribution. The homogenization of the carbon further enhances the ductility. Higher transformation temperatures lead to a lower stability of the austenite and increased fractions of martensite-austenite constituent, which acts as crack initiation points. Due to the use of a correlative microscopy approach these islands could be investigated with high-resolution methods. The gained results significantly contribute to the understanding of the phase evolution and the structure-property relationship of this new generation of AHSS.