Tempered martensitic steels have shown considerable strengthening by controlled precipitation of the transitional ε-carbide, which is precursor to the more stable cementite phase. It is widely accepted in literature that silicon plays a particular role in the aforementioned transformation. In order to gain further insight, studies have been carried out in a spring steel model alloy of composition Fe-0.55C-2.2Si wt.%. Mechanical tests have shown that in the ε → θ transformation regime there is a loss in strength and an increase in ductility. Albeit the apparent simple alloy composition, yield strengths above 2.4 GPa were obtained. The classical nucleation theory approach was used in order to understand the ε → θ transition. Both transformation and misfit strain energies have been considered in order to explain precipitation behaviour during tempering.