The two-mode phase-field-crystal (PFC) method is used to calculate two-dimensional phase diagram and to simulate the process of multistage microstructural evolution in the transformation from hexagonal phase to square phase, which is induced by deformation. And the effect of misorientation and deformation on dislocation, grain boundary, crystal structure and morphology of the new phase is carefully analyzed. Simulation results show that both the nucleation site and growth direction of the square phase are affected by the direction of deformation. Under a tensile deformation, the nucleation of the square phase occurs preferentially in the deformation zone; while under compression deformation, the nucleation of the square phase may begin at dislocations and grain boundary. Moreover, the new phase grows towards the direction along which the degree of atomic mismatch decreases, i.e. the vertical direction of tensile deformation and the parallel direction of compressive deformation. Besides, the free energy varies with misorientation. In small misorientation, the dislocation climbing, slipping and annihilating will result in an energy peak; while in a big misorientation, the dislocation annihilates in several stages and thus offsetting the energy caused by deformation. Furthermore, the process of phase transformation is complex: It is not a pure phase transformation but a composite change of phase transformation and dynamic recrystallization.