Pearlite is often said to be a two-phased, lamellar (or layered) structure composed of alternating layers of alpha-ferrite (88 wt%) and cementite (12%) that occurs in some steels and cast irons. In fact, the lamellar appearance is misleading since the individual lamellae within a colony are connected in three dimensions; a single colony is therefore an interpenetrating bicrystal of ferrite and cementite. In an iron-carbon alloy, during slow cooling pearlite forms by a eutectoid reaction as austenite is below 727 °C (1,341 °F) (the eutectoid temperature). Pearlite is a common microstructure occurring in many grades of steels.

The eutectoid composition of austenite is approximately 0.77% carbon; steel with less carbon content will contain a corresponding proportion of relatively pure ferrite crystallites that do not participate in the eutectoid reaction and cannot transform into pearlite. Likewise steels with higher carbon contents will form cementite before reaching the eutectoid point. The proportion of ferrite and cementite forming above the eutectoid point can be calculated from the iron/iron—carbide equilibrium phase diagram using the lever rule.