Abstract The two-way shape memory effect (TWSME) induced by martensite deformation and the stabilization of martensite of a Ti 36Ni 49Hf 15 high temperature shape memory alloy (SMA) have been investigated. The experimental results indicated that the martensite deformation is an effective method to get TWSME in the Ti 36Ni 49Hf 15 alloy even with a small deformation strain. During martensite deformation the martensite reorientation and the dislocation slip occur simultaneously. Thus an internal oriented stress field is easily created to induce the TWSME. The TWSME of the Ti 36Ni 49Hf 15 alloy shows poor stability during the subsequent thermal cycling. In addition, the martensite stabilization is caused by the martensite deformation. The variation of the elastic and irreversible energies should be responsible for this.