The effects of carbon addition on the optimum annealing temperature and the microstructures in Fe–Mn–Si–Cr–Ni–C alloys were investigated. The results show that the addition of carbon raises the optimum middle annealing temperature of thermal–mechanical cycling in Fe–Mn–Si–Cr–Ni shape memory alloys. When the carbon content is lower than 0.12 wt.%, the optimum annealing temperature is about 600 °C, and the mechanism of improving shape memory effect (SME) through the thermal–mechanical cycling is the increase of crystal defect. When the carbon content is 0.18 wt.%, the optimum temperature is raised to 1150 °C, and the mechanism of improving SME is the presence of Cr 23C 6 at grain boundaries, not the increase of crystal defect.
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