Abstract: A cold-working die steel was developed through adjusting allowing components and heat-treatment process to improve the conventional steel AISI D2 of which a lot of carbides in ledeburite offer very high wearability in combination with low impact toughness which is easy to lead D2 to break up in use and hard of forging and linear cutting. The effects of tempering temperature on the microstructure, hardness and impact toughness of the new steel (test steel) were investigated by means of metallographical microscope, hardmeter and impact taster. The results show that it has advantages of less carbides and smaller particle size if quenched at 1050°C and tempered at 500°C and its impact toughness and hardness are both higher than D2 at various tempering temperatures, e.g. HRC60 and 4.5×10⁵ J/m² at 500°C respectively. With coarse, big and uneven carbides removed, its structure is improved greatly, thus eliminating the break-up inactivation and prolonging the service life.