Experimental results have shown that, during mechanical cycling under tension-compression load within +/-4% strains, the NiTi shape memory alloy is cyclic strain-hardened. The maximum stresses under both tension and compression increase with increasing number of cycles and tend to stabilize with further cycling. The present work is focused on the martensite microstructure developed as a result of mechanical cycling. TEM observations show that, before cycling, the martensite variants are well self-accommodated to each other with the (011) type II twinning as the main lattice invariant shear. After mechanical cycling, the martensite plates are still self-accommodated and the (11 (1) over bar) type I twinning is most frequently observed. In addition to the stress-induced re-orientation of martensite and twin boundary movement within the martensite plate, various lattice defects have been developed both in the junction plane areas of martensite plates and within the martensite twins. (C) 1998 Acta Metallurgica Inc.