NiTiCu shape memory alloys have attracted much attention for their ability to reduce hysteresis, which is required fast responses in actuator and sensor applications, but the correlation between the properties and specific process of phase transformation is unclear. In this work, an atomic-level understanding of the detailed phase transformation behavior of NiTiCu shape-memory alloys is achieved based on a newly developed interatomic potential for the Ni–Ti–Cu ternary system. Free energy calculations based on the thermodynamic integration method faithfully reproduce reported experimental trends, such as the compositional dependency of different phase transformation paths. Further, large-scale molecular dynamics simulations performed on nanocrystalline alloys provide visual evidence of the detailed phase transformation process involving different martensitic transformation paths. Our results suggest that although both the composition and grain size can be adjusted to realize slim hysteresis, the effect of increasing the Cu amount is only significant if changes in the phase transformation modes are involved at relatively low Cu contents. When the material exhibits only a single phase transformation mode at relatively high Cu contents, the additional Cu is not highly effective in reducing the hysteresis.