The transformation behavior and microstructural characteristics of API X65 pipeline steel were investigated by dilatometry and microstructural observation. Microhardness measurements were used to verify the observed microstructures. The test steel is imported from abroad and is used extensively in Iran natural gas transmission projects. The continuous cooling transformation curves of the test steel were constructed. The results showed that with increasing the cooling rate from 0.5 to 40°C/s, the microstructure changes from polygonal ferrite, quasi-polygonal ferrite-pearlite to acicular ferrite. The microstructure was dominated by acicular ferrite in cooling rates higher than 5°C/s. The results can be used to design the optimum thermo-mechanical control process (through the selection of proper cooling rate) in domestic manufacturing process of the test steel.