Effects of annealing treatment from 923 K to 1023 K (650 °C to 750 °C) prior to cold rolling on the edge cracking phenomenon of a ferritic lightweight steel were investigated. The edge cracking was severely found in the hot-rolled and 923 K (650 °C)-annealed steels after cold rolling, whereas it hardly occurred in the 1023 K (750 °C)-annealed steel. As the annealing temperature increased, lamellar κ-carbides were dissolved and coarsened, and most of the κ-carbides continuously formed along boundaries between ferrite and κ-carbide bands disappeared. Microstructural observation of the deformed region of tensile specimens revealed that the removal of band boundary κ-carbides reduced the difference in tensile elongation along the longitudinal direction (LD) and transverse direction (TD), which consequently led to the reduction in edge cracking. The 1023 K (750 °C)-annealed steel showed fine ferrite grain size, weak texture, and decomposed band structure after subsequent cold rolling and intercritical annealing, because κ-carbides actively worked as nucleation sites of ferrite and austenite. The present annealing treatment prior to cold rolling, which was originally adopted to prevent edge cracking, also beneficially modified the final microstructure of lightweight steel.