The deformation induced dynamic transformation （DIDT） of a Fe-C alloy above austenite transformation equilibrium temperature is simulated by using a Q-state potts Monte Carlo （MC） model. The austenite-to-ferrite transformation, dynamic recrystallization （DRX） of austenite and ferrite, and the ferrite-to-austenite reverse transformation can be simulated simultaneously in the same MC model by building suitable MC transition rules. Meanwhile, an affine transformation model based on vector operation is also coupled with the MC model for the first time for tracking the changes in grain shape during dynamic transformation. The formation of ferrite during DIDT and the influence of austenite DRX on DIDT are simulated based on this MC model. The simulation results show that the competition between the DRX of austenite and the austenite-to-ferrite transformation causes the oscillation behaviour of ferrite kinetics.