Finite element (FE) methods have been extensively used to simulate the effects of material’s microstructure during machining processes. However, determination of the individual microstructure phase stress–strain curves is experimentally intensive and difficult to measure. Furthermore, these curves were also affected by heat treatment processes, chemical composition, and the percentage of individual microstructure phases. The objective of this paper is to develop and validate the Micromechanical Adaptive Iteration Algorithm to calculate the individual ferrite and martensite plastic behavior for dual-phase (DP) steel. This method requires a minimum of three experimental stress–strain curves from the same material with three different martensite volume fractions (Vm). Two of the stress–strain curves with different Vm are required to initialize the iteration algorithm to predict the individual plastic behavior of ferrite and martensite. The third stress–strain curve is used to validate the plastic behavior of individual ferrite and martensite for the given DP steel. Following on from here, the proposed algorithm was validated with two different grades of DP steel with 0.088%C and 0.1%C. Validation results show that the approach has consistent prediction capabilities, and the maximum difference observed between predicted and experimental results was 6.5%. The simulated results also show that the degree of strain partitioning between ferrite and martensite decreases with Vm.