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An Fe–1.06%V alloy was used to study the control of recrystallization through fine VN precipitates in cold-worked and nitrided ferritic matrix. Nitriding was carried out at 475°C in ammonia atmosphere. Subsequent high temperature annealing process was performed in hydrogen gas for 795, 820, 860 and 880°C, respectively. The data on recrystallization indicates that kinetics of recrystallization obeys an Avrami type equation with a temperature independent time exponent. Transmission electron microscopy techniques were used to measure the precipitate sizes and to study the changes in the microstructure. The activation energy evaluated for recrystallization was found to be consistent with that governing the VN particle coarsening. From these findings it was concluded that the initiation of recrystallization is dominated by the interface reaction controlled growth of VN stringers at subgrain boundaries. After the disappearance of stringers, the interaction of fine precipitates with subgrain boundaries is minimized and hence recrystallization starts.