After reporting on the ability of micro-EDM to significantly alter the transformation behaviour of Nitinol whereby increasing discharge energy reduces thermal hysteresis and results in a three-peak reverse phasetransformation on heating, this study helps to further characterize the Nitinol micro-EDM process. This is by closely varying discharge energy so as to establish the boundary conditions for the three peak transformation behaviour as well as establish the influence of arcing on the mechanical properties of Nitinol. Samples machined using micro-EDM and jet-ECM are analysed using differential scanning calorimetry as well as tensile testing with five loading and unloading cycles after which the samples are loaded till failure. Moreover, discharge pulses are used to analyse arcing. From the results, it is not only possible to conclusively identify and establish arcing as the main phenomenon behind the three peak transformation behaviour, but also that the thermal damage caused by arcing results in a high residual strain, reduced elongation to failure, loss of machining accuracy and a reduction in upper and lower plateau stresses. It is also evident that if the discharge energy is carefully controlled to avoid arcing, it can be increased over a significant range (from ≈3.4 μJ to ≈130.2 μJ in this study) without significantly altering the phase transformation behaviour of Nitinol, which is very closely linked with its shape memory and superelasticity.