Hardened steels in engineering applications tend to have gradient microstructures with varying amounts of retained austenite alongside harder phases such as martensite or bainite. However, the metastable austenite can transform into martensite under mechanical loads, resulting in an inelastic strain within the material from the volumetric mismatch between FCC austenite and BCT martensite. In this work, a new constitutive formulation based upon the critical driving force for austenite transformation is presented. The model was implemented into a crystal plasticity formulation, and empirical data from in-situ neutron diffraction was used to determine the local micro-plasticity and transformation plasticity parameters. The results from finite element modeling also show that using a homogenized finite element approach could help to establish a material model that can capture the transformation plasticity within these materials with good accuracy.