The objective of this study is to explore the void formation mechanisms and to clarify the influence of the hardness and structural parameters (volume fraction, size and morphology) of martensite particles on the void formation and mechanical properties in dual phase steels composed of ferrite and martensite. Two dual phase steels (Fe-0.099mass%C-1.63mass%Mn and Fe-0.148mass%-1.60mass%Mn) with martensite particles of different hardness values, volume fractions, sizes and shapes were produced by hot rolling and annealing. Mechanical properties were characterised by Vickers hardness and nanohardness measurements, tensile tests and hole-expansion tests. The initial microstructure and the deformed microstructure were characterized by means of scanning electron microscopy (SEM) and transmission electron microscopy (TEM). In situ tensile tests in a SEM were applied for direct observation of the void formation behaviour. In this study it is found that most voids form in martensite particles and few voids form in the ferrite matrix. The void formation in the martensite is related to plastic deformation and cracking of martensite particles. The voids in ferrite predominantly form near the end of the martensite particles but are not caused by the decohesion of martensite/ferrite interfaces. Three key factors that control the void formation behaviour in dual phase steels have been established: (i) a critical strain for void formation in the martensite, (ii) strain partitioning between the martensite and ferrite and (iii) strain localization. The critical strain for void formation depends on hardness of the martensite, but is independent of the volume fraction, shape, size and distribution of the martensite. The strain partitioning between the martensite and ferrite depends on the volume fraction and hardness of martensite particles. The strain localization is related to the morphology of the martensite particles and the strength of the ferrite. Softening of the martensite significantly retards void formation in the martensite, but does not change the void formation mechanisms. The increase of volume fraction of the martensite accelerates the void formation in the martensite by enlarging the size of voids both in the martensite and ferrite. It is suggested that controlling the hardness and structural parameters associated with the martensite particles such as morphology, size and volume fraction are the essential approach to retard the void formation in the dual phase steels.