An internal friction study was done on an Fe–28Mn–6Si–5Cr–0.5NbC (mass%) shape memory alloy using a dynamic mechanical analyzer. Internal friction and elastic modulus were concurrently measured as a function of temperature, strain amplitude and vibration frequency. Large internal friction peaks are observed during the fcc/hcp martensitic transformations. These high values of internal friction are mainly due to transient contribution, which appears only during cooling and heating. In isothermal conditions, no significant damping capacity can be seen when applied strain is less than 10 −4. Internal friction sharply increases with increasing applied strain amplitude. On the other hand, the internal friction is independent of vibration frequency. The internal friction behavior is considered to be due to the reversible motion of the fcc/hcp interfaces, which is achieved by the reversible motion of the Shockley partial dislocations at the tip of the hcp martensite plates. It was also found that the thermomechanical treatment consisting of pre-rolling and subsequent aging enhances the damping capacity of the alloy.