In the present study, an unalloyed ductile iron containing 3.50%C, 2.63%Si, 0.318%Mn and 0.047%Mg was intercritically austenitised (partially austenitised) in the two phase region (alpha+gamma) at temperatures of 795 and 815 degrees C for 20 min, and then was quenched into a salt bath held at an austempering temperature of 365 degrees C for various times to obtain various ausferrite volume fractions. Fine and coarse dual matrix structures were obtained from the two different starting conditions. Some specimens were also conventionally austempered from 900 degrees C for comparison. Results showed that a structure having proeutectoid ferrite plus ausferrite (bainitic ferrite+high carbon retained or stabilised austenite) was developed. The phase previously described as new ferrite (also called epitaxial ferrite) was observed to form following heat treatment only in specimens with coarse austenite dispersion after austempering from the (alpha+gamma) temperature range. It was observed that the parent austenite dispersion present at the intercritical austenitising temperature has an effect on the volume fraction of high carbon austenite following austempering. Finer austenite dispersions produced more stabilised high carbon austenite than coarse ones for a given austempering time. The volume fractions of proeutectoid ferrite, new ferrite, ausferrite can be controlled to influence the strength and ductility. Specimens austempered from the (alpha+gamma) temperature range exhibited much greater ductility than conventionally austempered samples. Within each of the series austempered from the (alpha+gamma) temperature range, the tensile strength increased and ductility decreased with increasing ausferrite volume fraction and decreasing proeutectoid ferrite volume fraction. However, specimens having a fine ausferritic structure without new ferrite exhibited lower ductility and higher strength than specimens with a coarse ausferritic structure under the same austempering conditions. The specimen with similar to 60% AFVF (coarse structure) and similar to 65% AFVF (fine structure) exhibited the best combination of high strength and ductility compared to pearlitic grades, but their ductility was slightly lower than ferritic grades. These materials satisfy the requirements for the strength of quenched and tempered grades and their ductility superior to that of this grade.