This work extends the application of the well-established Estrin and Mecking (EM) work-hardening model in unstable low temperature austenite region. The interaction between work hardening, recovery and softening attributed to recrystallization and transformation to ferrite under dynamic conditions is considered. Experimental parameters were varied to study the effects of strain, strain rate and temperature during hot rolling in the low temperature austenite region. Hot compression tests were performed two microalloyed steels—one containing V and the other Nb—at strain rates between 0.1 and 10 s−1 over a temperature range of 750-1000 °C. A model is presented that describes the influence of dynamic recovery on flow behavior in the unstable austenite region. The modified work-hardening model incorporates an additional fitting parameter to the EM model and is dependent on the recovery and softening rates. The new model improved prediction in the unstable austenite region, while the original EM model gave better correlation at relatively higher temperatures when dynamic recrystallization is dominant or at relatively lower temperatures when only dynamic recrystallization to ferrite was the softening mechanism.