Hypereutectoid SAE 52100 steel is extensively used in bearing applications. Microstructure modification in terms of dislocation martensite and carbide refinement was achieved for SAE 52100 steel through a simple duplex heat treatment. Refinement of prior austenite grains to less than 5 μm resulted in the conversion of conventional high-carbon twinned martensite to dislocation martensite. The concurrent refinement of austenite grains and carbide precipitates was accomplished by high-temperature austenitization followed by low-temperature tempering. This resulted in nanoscale nonstoichiometric ε-carbides within a heavily twinned martensitic structure. These nanoscale carbides acted as grain boundary pinning agents after their transformation to θ-carbides during the final austenitization process. The resulting microstructure was characterized by a fine dispersion of θ-carbides within dislocation martensite and showed roughly 24% increase in tensile strength and 30% better wear resistance compared to conventional structure.