In the present study, a hybrid in situ neutron diffraction and digital image correlation measurement was performed on tensile deformation of an ultrafine grain (UFG) stainless steel exhibiting a huge Lüders band deformation to evaluate the individual contribution of the austenite matrix and the deformation-induced martensite to the strain hardening during the propagation of the band. Quantitative analysis revealed that the strain hardening of the austenite matrix was insufficient to maintain a uniform deformation when the flow stress was greatly enhanced by the UFG structure. The strain hardening required for the Lüders band to propagate was mostly provided by the formation of martensite and the high internal stress within it.