The phase decomposition of orthorhombic martensite and the age hardening effect in TC21 alloy during aging treatment were investigated in this paper. The as-quenched alloy shows an acicular structure of orthorhombic α″ martensite. The overall decomposition reaction after aging at 300-700 °C for 4 h can be represented by the order of α″→α″+α→α+β. Aging at lower temperature, the acicular α phase firstly precipitated along with the martensite lath. With increasing of aging temperature, the fine precipitated α phase grows rapidly to lath or plate morphology. Then the much finer second α phase, about 10 nm in width and several micrometers in length, and also the densely distributed β phase, about 10-50 nm in size, were identified using dark field micrograph and selected area electron diffraction. Finally the orthorhombic α″ phase decomposed to α+β mixed phase. Significant age-hardening was observed in TC21 alloy, compared with the as-quenched alloy, the microhardness increased by 35 percent after aging at 500 °C for 4 h, the age-hardening can be attributed to the fine second α precipitates and the dispersively distributed β phase formed by the reverse transformation of orthorhombic martensite.