The martensite structure is the most important microstructure in tool steel due to its high hardness. However, a lack of ductility is the major drawback. In order to improve the ductility and still maintaining a suitable hardness a tempering process is needed. The tempering process will cause recovery and recrystallization in the matrix, and moreover carbides will precipitate. The specific carbides have different characteristics and thus the type of carbide formed during tempering is very important for the properties of the steel. The simulation software (TC-Prisma) is interesting because it can predict type, size, and amount of carbides. The present study was carried out to investigate both the microstructure, hardness evolution of martensite and precipitation which occurred in Fe-C-Cr steel with different compositions, tempered at 700oC. The experimental results were compared with simulation results. Micro-Vickers hardness test with a load of 100 g was used and the hardness value dropped 40% and 60% in low carbon alloy and high carbon alloy steels, respectively. The significant drop occurred during the first 30 seconds of tempering due to recovery of the matrix. Hardness values slightly decreased and then stabilized during continued tempering. The microstructure of martensite and the morphology of carbides at different tempering times were examined by scanning and transmission electron microscopy in order to study the precipitation of carbides from the nucleation and growth to coarsening. There are three types of carbides which precipitated in the Fe-C-Cr specimens: M7C3, cementite and M3C2 depending on the composition. Fe-0.16C-4.05Cr contained M7C3, Fe-0.95C-1.065Cr contained cementite and M3C2 and Fe-014C-0.983Cr and Fe-0.88C-4.12Cr contained M7C3 and cementite. M7C3 has a faceted shape and precipitates referentially at grain boundaries. On the other hand, cementite has an elongated shape and precipitated mainly at grain boundaries but also intragranulary. M3C2 has a rounded shape and was seen only in very small amounts, and seemed to precipitate at random sites. The trend of carbide growth in experiments is consistent with the simulations using TC-Prisma, but more work is needed to enable quantitative comparisons.