This paper reports the effect of nano-precipitation strengthening of ferrite on the tensile behavior of ferrite-martensite dual phase (DP) steels. Samples of ferrite-martensite DP steel containing a dispersion of nano-sized vanadium carbides (VCs) in the ferrite phase were produced by interphase precipitation and quenching of a V-added low carbon steel, and the mechanical properties are compared with those of conventional ferrite-martensite DP samples without VC particles. Both the yield stress and the ultimate tensile strength are significantly increased by nano-VC precipitates. For ferrite volume fractions of 20–50% a dispersion of VCs results in only a small change in the elongation, whereas for ferrite volume fractions of above 50% both uniform and post-uniform elongations are decreased by a VC dispersion. It is suggested that dispersion of nano-precipitates in ferrite is an effective approach to simultaneously improve the strength and the strength-ductility balance of DP steels. Digital image correlation (DIC) analysis demonstrates that the ferrite phase is more deformed than the martensite phase in both VC-free and VC-dispersed DP samples, but that such strain partitioning is less pronounced in the VC dispersion-hardened samples. It is found that the stress-strain relationship of DP samples can reasonably be explained based on a law of mixtures using partitioned strain and stress values as estimated from the DIC analysis.