The demand for Advanced High Strength Steel (AHSS) in the automotive industry is increasing day by day. It is mainly motivated by the fact that AHSS can be used as thin sheets while having high strengths. It enables weight reduction of the automobiles which consequently increases the fuel efficiency and has proven to be less harmful to the environment. It is also expected that AHSS will have even higher strength in the near future. Cold work tools steels with 5 wt.% Cr are commonly used to process AHSS. Therefore, the tool steel must meet the challenges in the future, i.e. have even higher hardness, compressive strength and toughness. One way of increasing the mechanical properties of the tool steel is by improving the heat treatment parameters. However, it is not possible without a deeper understanding of the heat treatment process. Therefore, this work presents investigations related to phase transformations occurring in a 5 wt.% Cr cold work tool steel during heat treatment. Furthermore, the influence of austenitisation and tempering temperatures on the microstructure and mechanical properties were investigated. The studies revealed that a higher austenitisation temperature can be used to achieve a higher hardness, good compressive strength and adequate toughnessof the steel. However, too high austenitisation temperature may result inexcessive coarsening of prior austenite grains which reduced the impact toughness. It was also found that retained austenite can transform during tempering by two different mechanisms. Firstly, when tempering at 525°C, carbides precipitate in retained austenite lowering its stability and permitting a transformation to marten site on cooling. Secondly, when tempering at 600°Cfor extended holding time retained austenite isothermally transforms to ferrite and carbides. This occurs by precipitation of carbides in retained austenite followed by a final transformation to ferrite and carbides.These results were used to understand the standard tempering procedure of the 5 wt.% Cr cold work tool steel. Furthermore, alternative heat treatment procedures are discussed based on the important findings presented in this thesis.