The mechanism of the evolution of the deformed microstructure at the earliest stage of annealing where the existence of the lowest length scale substructure paves the way to the formation of the so-called subgrains, has been studied for the first time. The study has been performed at high temperature on heavily deformed Ti-modified austenitic stainless steel using X-ray diffraction technique. Significant changes were observed in the values of the domain size, both with time and temperature. Two different types of mechanism have been proposed to be involved during the microstructural evolution at the earliest stages of annealing. The nature of the growth of domains with time at different temperatures has been modelled using these mechanisms. High-resolution transmission electron microscopy has been used to view the microstructure of the deformed and annealed sample and the results have been corroborated successfully with those found from the X-ray diffraction techniques.