Microstructural and magnetic properties changes of a metastable ferritic-austenitic stainless steel due to cold rolling were studied together with the possibility to develop a new ferritic-martensitic stainless steel. In order to reduce costs low-Ni content was maintained in the lean duplex stainless steel considered, making it more susceptible to strain-induced martensitic transformation. In this study a practically complete gamma -> alpha' transformation was found for 80% of thickness reduction, resulting a new two-phase ferritic-alpha' martensitic stainless steel. To investigate the structural evolution different values of thickness reduction were applied. Light optical and scanning electron microscopy were performed to characterize the morphology and grain refining of the structure after each rolling step. Martensitic transformation and work hardening were detected and analyzed by studying of magnetic properties (saturation magnetic polarization, relative magnetic permeability, coercivity). Additionally, hardness tests were performed. The results highlighted a strong grain refining and increase in martensitic phase and hardness with increasing cold deformation. A direct relationship between microstructure and magnetic properties was revealed. In particular the reciprocal of relative magnetic permeability and the coercivity increased with martensite content and the amount of cold deformation. Therefore, the possible application of magnetic measurements as non-destructive tests to study microstructural evolution during cold rolling was shown for the steel considered.