Abstract The damping capacity of Co–32 wt.% Ni alloy was investigated as a function of the amount of thermal and strain-induced e martensite under non-magnetic and 900 Oe magnetic fields, respectively. The damping capacity of the Co–32 wt.% Ni alloy containing e martensite without magnetic field consists of the magneto-mechanical damping capacity of mainly α phase, damping capacities of α and e phases without magneto-mechanical damping effect. Under a magnetic field of 900 Oe, the more the thermal e martensite mass fraction the higher the damping capacity. However, the damping capacity of the deformed Co–32 wt.% Ni alloy with the strain-induced e martensite decreases with increasing deformation degree despite the increase in total e martensite fraction, because the lattice defects like dislocations introduced during deformation act as barriers to movement of damping sources such as magnetic domain walls, stacking faults boundaries in both α and e phases, and α/e interfaces.