This study examines the interface layer between a high-strength low-alloy steel and an overlaying austenitic stainless steel as deposited through wire arc additive manufacturing in a bi-metal block. By utilizing optical and electron microscopy techniques, and accompanied by phenomenological and thermodynamic modeling, the work elucidates on the nature of the distinct microstructural features at a new level of detail. Results showcase martensite in the form of a band along the fusion line of the first dissimilar layer, as well as in segregated islands. Within the same bead, yet away from the fusion line, an austenite matrix is identified alongside a large phase fraction of primary ferrite and sparse bainite. These findings enhance our understanding of the nature of the heterogeneous microstructure at the interface of a bi-metal build and establish empirical evidence for future modeling of microstructural development. Supplementary characterization reveals the impact of these microstructural heterogeneities on bulk mechanical performance. Hardness indents exhibit varied results along the interface, peaking at martensite islands with values up to 370HV_0.2, surpassing the neighboring matrix by 50%. Under quasi-static tensile loading, bi-metallic specimens display strain partitioning along the fusion boundary, as confirmed by Digital Image Correlation. When compared to the adjoining stainless steel, the diluted interface layer exhibits superior strength (σ_y: 411 MPa) and comparable ductility (24%), leading to necking and failure away from this region. These results help predict the structural performance of bi-metal parts, and build a base for further research in more intricate loading scenarios, such as crack propagation processes.