Gradient structures (GS) have emerged as a focal point due to their capability to overcome the performance limitations of homogeneous materials. In this study, GS was prepared using the cyclic torsion method for low-carbon (LC) and twinning-induced plasticity (TP) steel, aiming to investigate the effect of strain hardening ability on the formation and deformation mechanisms of GS. The TP-GS steels exhibit a significant gradient distribution of hardness, dislocation cells (DCs), subgrains, stacking faults (SFs), and deformation twins (DTs). In contrast, LC-GS steels display only a dislocation density gradient. Finite element modelling (FEM) revealed the difference in stress gradient between two steels. After tensile deformation, denser, finer, and multi-level DTs are observed at the edge region of TP-GS steels, whereas the DCs in the center region evolve into dense SFs and DTs, preserving the significant gradient microstructure. Hardness and microstructure distributions reveal a “dynamic-enhanced gradient effect” at both the edge and center regions of TP-GS steels, leading to an excellent synergy of strength, plasticity, and work hardening ability. In contrast, LC-GS steels rely solely on the deformation potential of the center region, resulting in a “dynamic-weakened gradient effect”. This finding offers valuable insights for the design and preparation of GS.