Hot band Fe-3%Si steel (CRGO or cold rolled grain oriented) was cold rolled with different reductions. The main objective of this study was an overall understanding of deformation texture and microstructure development. Hot band CRGO had a strong alpha-fiber (RD//) texture. Cold reduction strengthened the alpha and gamma (ND//) fibers, but weakened theta (ND//(100)). All Taylor type deformation texture models were reasonably successful in predicting these bulk texture developments, and the Lamel model seems to be the 'best-fit' model, both in terms of a 'deviation' parameter (indicating differences between experimental and simulated values of idealized texture components) and a 'trend' parameter (indicating the relative change(s) in texture components with strain). The striking feature of the microstructure was the 'selective' appearance of grain interior strain localization's. These appeared at approximately 37degrees with the rolling direction (RD). Though 37degrees bands appeared only in orientations with high Taylor factor (M), the absolute value of the Taylor factor alone, was not enough for the appearance of such bands. Negative textural softening or (dM/depsilon) values, on the other hand, were always associated with the appearance of 37degrees bands, justifying or explaining their formation on the basis of a macroscopic plastic instability theory.