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The effect of Cu addition and the intercritical annealing (IA) temperature on the microstructural evolution and mechanical properties of Fe-0.4C-7Mn-4Al (wt%) was investigated via scanning electron microscopy (SEM), electron backscatter diffraction (EBSD), X-ray diffraction (XRD) and nanoindentation tests. The results showed that the volume fraction and the average grain size of austenite, and the fraction of high angle grain boundaries, increased with IA temperature increase in the range of 650 °C to 710 °C. The addition of Cu facilitates the formation of Cu-rich nanoparticles, raises the volume fraction of austenite, and delays the recrystallization of austenite. As IA temperature increased, the yield strength (YS), ultimate tensile strength (UTS), and Lüders bands strain (LBS) decreased in both experimental steels. The Cu addition not only increases the YS of medium Mn steel but also benefits the decrease of LBS. The best comprehensive mechanical properties were obtained at the IA temperature of 690 °C in the studied steel, with Cu addition. According to nanoindentation experiments, the Cu addition raises the hardness of ferrite and austenite from 4.7 GPa to 6.3 GPa and 7.4 GPa to 8.5 GPa, respectively, contributing to the increase of YS of medium-Mn steel.