A unified description for the evolution of ε– and α^′– martensite, and twinning in austenitic steels is presented. The formation of micron—scale ε and twin bands is obtained by considering the evolution of hierarchically arranged nano–sized ε and twins (embryos). The critical size and applied stress when these structures form is obtained by minimising their free energy of formation. The difference between forming an ε plate or a twin lies in the number of overlapping stacking faults in their structure. A nucleation rate criterion is proposed in terms of the critical embryo size, resolved shear stress and embryo number density. Based on Olson and Cohen's classical α^′–martensite transformation model, the nucleation rate of α^′ is considered proportional to that for ε. These results, combined with dislocation–based approximations, are employed to prescribe the microstructure and flow stress response in steels where transformation–induced–plasticity (TRIP) and/or twinning–induced–plasticity (TWIP) effects operate; these include austenitic stainless and high–Mn steels. Maps showing the operation range of ε, α^′ and twinning in terms of the stacking fault energy at different strain levels are defined. Effects of chemical composition in the microstructure and mechanical response in stainless steels are also explored. These results allow identifying potential compositional scenarios when the TRIP and/or TWIP effects are promoted in austenitic steels.