1. The condition of theα andγ-phases changes during direct and reverse martensitic transformations. The maximum lattice distortions of both phases were observed at temperature Mf, their absolute values being greater in theγ-phase. This apparently hampered martensite formation since theα→γ transformation distorts theγ-phase. However, observations of stabilization of theγ-phase during extended holding at temperature Af indicated that, in addition to strain-hardening, other factors contributed toward stabilization. 2. A small plastic deformation of a quenched specimen reduced the second-order distortions in the lattices of both phases. Apparently, plastic strain must cause, to a certain degree, a relaxation of heterogeneous local stresses. The reduced stress level in theγ-lattice created conditions favoring an additionalγ→α change. It is possible that the stress relaxation taking place during plastic deformation also contributed towards the growth of coherent-scattering areas in theγ-phase during anα→γ transformation. 3. Plastic straining of a quenched specimen at 20°C and of a specimen in the initial condition had no effect on the critical temperatures of the reverse martensitic transformations tAs and tAf. A restoration treatment completely removed the effect of deformation.