The effect of quenching plus tempering and intercritical annealing heat treatments on microstructure and dry sliding wear behaviour of 1 wt.% Si added PM steel is investigated. The experimental results show that a mixture of partially transformed ferrite, martensite, and pearlite is obtained in the intercritically annealed specimen. This mixture is probably formed due to the shift of the Ac-1 temperature by Si addition forming additional cementite. In the quenched plus tempered specimen, fully tempered martensite and ferrite are obtained owing to the increase of Ac-3 temperature by Si addition. As also seen, the wear rate of the intercritically annealed specimen is higher than that for quenched plus tempered specimen. Higher wear rates obtained in the intercritically annealed specimen is caused by hard martensite islands embedded in the soft ferrite matrix.