Abstract The superelastic behavior of polycrystalline nano-grained NiTi shape memory alloy microtube under uniaxial tension is studied in this paper. The nominal stress–strain curve of the microtube during superelastic deformation is recorded. Both direct surface observation and observation by using a special surface coating show that the deformation of the tube is via the nucleation and propagation of macroscopic stress-induced martensite band. It is also found that the martensite nucleates in the form of a spiral lens-shaped narrow band that inclines at about 33 o to the plane of cross section of tube when the stress reaches the peak of stress–strain curve. The spiral band grew via gradual increase in both width and length of the band and finally merged into a single cylindrical band. The subsequent deformation of the tube is realized by the growth of this cylindrical martensite band. Several other deformation features of the tube are also observed and the results are discussed and compared with the theoretical analysis in this paper.