The mechanism which dominates the flow stress and work-hardening of pearlitic steel at small strains is investigated from both the analysis of tensile properties and microscopic observations of slip patterns. The flow stress and the work-hardening rate are shown to increase linearly with an inverse square root of the mean free ferrite path. The flow behavior of pearlite is characterized by the increase in the Petch slope with strain and by the minor dependence of the flow stress and work-hardening on the strain rate. Analysis of a strain-rate cycling experiment shows that a large part of the flow stress is the long-range internal stress and that the effective stress acting on dislocations is almost the same as that in ferritic iron. Microscopic observations have revealed that the increase in the density of dislocations takes place preferentially along the ferrite-cementite interface and that slip bands extend along the grain boundaries and through the gaps of lamellar cementites. Shear of cementites is eventually observed at the intersections with slip bands. Such features of the deformation of pearlite are consistently explained by the model that dislocations, which are generated at the interface between cementite and ferrite rather than those multiplied within the ferrite grains, develop a large amount of long range internal stress within the pearlitic ferrite. Deformation of cementites is not likely to affect the flow stress or work-hardening of pearlite.