Abstract A new model describing the microstructure and strength of lath martensite is introduced. The packet and block size were found to linearly depend on the prior-austenite grain size when introducing relevant crystallographic and geometric relationships of their hierarchical arrangements. A mechanism for the lath boundary arrangement within a block is postulated to ensure complete carbon redistribution to the lath boundaries. Accordingly, the dislocation density is obtained by considering the lattice distortion energy within a lath being equal to the strain energy of the dislocation density at the lath boundaries. Tempering effects are introduced by estimating the extent of carbon diffusing away from the lath boundaries; this mechanism relaxes the Cottrell atmospheres of lath dislocations and coarsens the boundaries. The yield stress as well as the microstructure evolution during tempering are successfully predicted by combining these results. The model is further extended to describe the yield stress in dual-phase steel microstructures by employing the iso-work principle. The model predictions are validated against experimental data in seven martensitic and five dual-phase steels, where the prior-austenite grain size, carbon content, tempering conditions and martensite volume fraction are employed as input. These results cover wide composition, initial microstructure and tempering conditions.