A hot rolled steel sheet comprises ultrafine ferrite grains as a main phase and fine second phase particles. The ferrite grains have an average grain size of not less than 2 &mgr;m but less than 4 &mgr;m. The second phase has an average particle size of not more than 8 &mgr;m and in not less than 80% of the second phase, the spacing of the second phase particle with the closest second phase particle is not less than the second phase particle size. The steel sheet has an ultrafine grain structure, superior mechanical characteristics, reduced anisotropy in its mechanical characteristics and high formability. A process for producing the steel sheet is also disclosed.