The effect of C on the damping and mechanical properties of thermally trained Fe-17wt%Mn-X wt%C (0<X<0.06) high-damping alloys was analyzed by the impulse internal friction technique and uniaxial tensile tests. The alloys were subjected to a combination of thermo-mechanical processing and thermal cycling which resulted in a C content independent phase fraction and grain size of ɛ-martensite and γ-austenite. The ɛ↔γ phase transformation and the anti-ferromagnetic transition in the γ-phase were observed in the temperature-dependent damping and modulus measurements, respectively. While C had no influence on the intrinsic internal friction of the γ-phase, small amounts of C significantly reduced the damping associated with the motion of ɛ-γ interface boundaries and the widening of stacking faults by the movement of partial dislocations. The C content at which these relaxation processes were suppressed, i.e. approximately 0.03wt%C, coincided with the onset of dynamic strain aging as inferred from the appearance of serrations on the flow curves.