The present work focuses on the formation of the γ′-phase and its impact on the functional properties of a Fe-28Ni–17Co–11.5Al–2,5Ti (at.-%) shape memory alloy (SMA) under cyclic loading conditions at different testing temperatures. The effect of aging treatments conducted in a wide range of aging temperatures and times was investigated. While specific heat treatments, namely 600 °C for 4 h, result in excellent superelastic properties with a fully reversible material response in single cycle experiments, interestingly, functional degradation is found to be more pronounced under cyclic loading compared to other derivatives of the Fe–Ni–Co–Al-based SMA systems. In addition to mechanical testing, a detailed microstructural analysis was conducted using transmission electron microscopy. The results of the present study clearly reveal that chemical inhomogeneities have to be carefully considered for the characterization of the functional performance of these iron-based SMAs. Chemical heterogeneities are not only identified as the underlying microstructural mechanism for the pronounced cyclic degradation behavior, but are also supposed to have a significant influence on the precipitation kinetics of the γ′-phase.