The growing demand for lightweight vehicles has positioned medium-manganese steel as a prominent third-generation advanced high-strength steel, owing to its exceptional strength-ductility balance. Nevertheless, limitations in existing heterostructure processing routes and insufficient understanding of strengthening and toughening mechanisms have hindered further performance optimization and practical application. This study proposes a novel cyclic reverse phase transformation annealing (ART) process as an effective method for actively constructing a gradient heterostructure in medium-manganese steels. The core of this work lies in elucidating the microstructural formation mechanism and the subsequent strengthening-toughening contributions of this tailored heterogeneity. The cyclic ART process, involving multiple austenite reversion and cooling cycles, successfully produces a distinct heterostructure characterized by a gradient grain size distribution, where the grain size in the 1/4 edge region is markedly finer than in the 1/2 center region, accompanied by an elevated dislocation density. This specific structure enables a simultaneous enhancement of strength and ductility, ultimately achieving a tensile strength of 1248 MPa with an elongation of 43.6 %, coupled with a sustained TRIP effect. Furthermore, this research systematically reveals the synergistic role of Cu alloying, which not only significantly improves austenite stability but also facilitates the formation of nano-scale precipitates such as TiV that effectively impede grain boundary migration and promote refinement. These findings offer novel perspectives for the compositional and thermomechanical processing design of heterostructured medium-manganese steels, contributing significantly to the development of high-performance automotive steels.