Tensile deformation of superelastic NiTi shape memory alloy wires at temperatures above austenite finish temperature proceeds via stress-induced martensitic transformation followed by plastic deformation of oriented martensite. While superelastic deformation tends to proceed in localized manner, plastic deformation of martensite is considered to be homogeneous. In this work, we have investigated strain localization patterns in tensile tests on superelastic NiTi wires deformed until fracture in wide temperature range from 10 to 400 °C using in situ digital image correlation analysis of local strains and analyzed lattice defects created during the deformation in TEM. We have found that plastic deformation of oriented martensite can be either homogeneous or localized, depending on the yield stress and strain hardening rate (on the Considere criterion for stability of tensile deformation). Plastic deformation of martensite proceeds via peculiar deformation mode involving combination of deformation twinning and dislocation-based kinking. Strain localization takes the form of either necking leading to wire fracture at 13–15% strain or via propagation of macroscopic deformation band fronts at constant stress. Regardless the deformation is homogeneous or localized, plastic strains at fracture reach ~ 50%. Strain localized within the propagating band front as large as ~ 40% was observed in tensile tests test on NiTi wires having specific microstructures (grain size ~ 230 nm) in a narrow temperature range (~ 10–60 °C).