Abstract It is suggested that the heterogeneous nucleation of martensitic phase transformations occurs as a result of dynamic lattice instabilities forming near planar lattice defects. It is shown that the anharmonic terms of the elastic free energy as measured for Li, Na and βCu-Zn can be used to predict phonon soft mode instabilities at lattice strains of the order of a few per cent. It is argued that this localized soft mode instability will then propagate through the lattice under favorable conditions. Several experimental tests are proposed.