The effect of intercritical annealing temperature (IAT) on the multiphase microstructure evolution of 0.02C-7Mn steel was investigated using scanning electron microscopy (SEM), electron backscattered diffraction (EBSD), X-ray diffraction (XRD), and transmission electron microscope (TEM), as well as Thermo-Calc and Dictra software simulations. The results indicated that an hexagonal closed-packed phase (ε-martensite) mainly appeared on reversed austenite by air cooling after the steel was annealed between 650 °C to 675 °C for 1 h. The multiphase microstructure contained retained austenite (RA), athermal ε-martensite, annealed martensite, and athermal α-martensite, but both their content and morphology strongly depended on the IAT. In contrast to athermal ε-martensite, RA mainly existed after annealing at 600 °C to 650 °C. The maximum volume fraction of RA is 24.32% after annealing at 650 °C, while it was 28.54% for athermal ε-martensite after annealing at 675 °C. RA displayed a granular and thin lath-like morphology after annealing at 620 °C and a larger granular and coarse lath-like morphology after annealing at 650 °C. The athermal ε-martensite morphology was granular and lath-like at 650 °C, and block-like at 675 °C. Decreasing the C and Mn contents, and increasing the lath size of reversed austenite decreased the thermal stability and the stacking fault energy (SFE), which induced martensitic transformation with increasing IAT. As a result, the reversed austenite remained at low IAT, transformed into athermal ε-martensite at medium IAT, and induced athermal α-martensite at high IAT.