Pearlitic transformation in an ultrafine-grained (UFG) hypereutectoid steel was investigated. The steel was a plain carbon steel containing 1.0 wt% C and very few other elements. The UFG samples were prepared by thermomechanical treatment, and an average grain size of approximately 1 μm was achieved. The pearlitic transformation was conducted by heating the UFG samples at 1023 K for different times and then cooling in air. A new pearlitic transformation phenomenon was observed: traditional lamellar pearlite can be observed only when the grain size increases to a dimension larger than approximately 4 μm, which is a critical value. When grain size is smaller than this value, the pearlitic transformation occurs in the form of divorced eutectoid, and the microstructure is the ferrite matrix with granular cementite. This research indicates that grain size has a great influence on pearlitic transformation by shortening the diffusion distance and increasing the diffusion rate of carbon atoms in the UFG steel.