The microstructure and mechanical properties of Fe–Mn–Ge alloys have been investigated using optical microscopy, transmission electron microscopy, room temperature and high temperature X-ray diffraction (XRD) and tensile testing. It has been found that increasing Ge content in Fe–24Mn–Ge alloys considerably decrease the amount and width of ε martensite plates, which verifies the role of Ge in depressing the γ→ ε martensitic transformation in Fe–24Mn–Ge alloys. It has also been found that increasing Ge content decreases yield and tensile strength, and furthermore, increases the lattice parameter of austenite and the ductility in Fe–Mn–Ge alloys. High-temperature XRD shows that there is an anomalous expansion of the lattice parameter for the untransformed austenite below martensitic transformation temperature M s, compared with the linear relationship of lattice parameter vs. temperature between the Néel temperature T N, and the M s. Comparisons of the lattice parameter of austenite and ε martensite for several Fe–Mn–Ge and Fe–Mn–C alloys show that the alloy's contraction during the γ→ ε martensitic transformation mainly occurs at the direction being perpendicular to ε martensite plates. Therefore, it is believed that an internal stress, caused by the contraction of alloy being perpendicular to ε martensite plate, is responsible for the anomalous expansion of the untransformed austenite below the M s, and, the formation of the triangular grid microstructure of ε martensites. While the internal stress, which originated from the inhomogeneous dilation in the alloy may play important role in the thermally induced γ→ ε martensitic transformation.