A unique property of Nickel–Titanium (NiTi) shape memory alloys is their ability to dissipate the shock loading energy by two complementary mechanisms: (a) through deformation-induced phase transformations caused by the structural vibrations, and (b) through the phase transformations caused by the stress wave propagation in the material. Despite extensive research work on the former mechanism, the latter one is still highly unknown, particularly at the atomistic scale. In this paper, the phase transformation, and consequently the energy dissipation, caused by the propagation of stress waves in single-crystal and polycrystalline NiTi alloys under shock wave loadings are investigated using molecular dynamics (MD) method. The nanostructure and dynamic response of the material, when subjected to a shock loading, are studied at the atomistic level. The effects of various nanoscale properties, including the orientation of lattice with respect to the shock loading direction, average grain size, and the effect of grain boundaries on the stress wave propagation, phase transformation propagation, and the energy dissipation in polycrystalline NiTi alloys are studied.