Transformation-induced plasticity (TRIP) effect is the outstanding mechanism of austenitic stainless steel. It plays an important role in increasing formability of the steel due to higher local strain hardening during deformation. In order to better understand forming behavior of this steel grade, the strain-induced martensitic transformation of the 304 stainless steel was investigated. Uniaxial tensile tests were performed at different temperatures for the steel up to varying strain levels. Stress–strain curves and work hardening rates with typical TRIP effect characteristics were obtained. Metallographic observations in combination with X-ray diffraction method were employed for determining microstructure evolution. Higher volume fraction of martensite was found by increasing deformation level and decreasing forming temperature. Subsequently, micromechanics models based on the Mecking–Kocks approach and Gladman-type mixture law were applied to predict amount of transformed martensite and overall flow stress curves. Hereby, individual constituents of the steel and their developments were taken into account. Additionally, finite element (FE) simulations of two representative volume element (RVE) models were conducted, in which effective stress–strain responses and local stress and strain distributions in the microstructures were described under consideration of the TRIP effect. It was found that flow stress curves calculated by the mixture law and RVE simulations fairly agreed with the experimental results. The RVE models with different morphologies of martensite provided similar effective stress–strain behavior, but unlike local stress and strain distributions, which could in turn affect the strain-induced martensitic transformation.