Ultraviolet-photoemission (UPS) measurements and supporting specific-heat, thermal-expansion, resistivity and magnetic-moment measurements are reported for the magnetic shape-memory alloy Ni2MnGa over the temperature range 100 K < T < 250 K. All measurements detect clear signatures of the premartensitic transition (TPM ∼ 247 K) and the martensitic transition (TM ∼ 196 K). Temperature-dependent UPS shows a dramatic depletion of states (pseudogap) at TPM located 0.3 eV below the Fermi energy. First-principles electronic structure calculations show that the peak observed at 0.3 eV in the UPS spectra for T > TPM is due to the Ni-d minority-spin electrons. Below TM this peak disappears, resulting in an enhanced density of states at energies around 0.8 eV. This enhancement reflects Ni-d and Mn-d electronic contributions to the majority-spin density of states and is accompanied by significant reconstruction of the Fermi surface. [5] as a system undergoing a martensitic transition (MT) in its ferromagnetic phase (T C ∼ 380 K) with little magnetic hysteresis. In the last decade research on these alloys has focused on the structural and magnetic characterization and on their shape-memory applications [6]. First-principles calculations [7,8] and measurements on shape-memory alloys [9,10,11,12] indicate the driving role of the electronic structure and its relation to the lattice dynamics.The lattice dynamics of Ni 2 MnGa has been investigated from ultrasonic measurements [13] and neutron diffraction experiments [14,15,16]. It was found that the transverse TA 2 phonon branch exhibits pronounced softening at 1/3 of the zone boundary on decreasing the temperature, and this softening was described as a Bain distortion in the context of the Wechler, Lieberman, and Read theory of martensite formation [17]. In similar structural shape-memory alloys InTl [9], AuZn [10] and NiAl [11], this softening is associated with nesting features of the Fermi surface [8]. Below a certain temperature, there is a freezing of the displacements associated with this soft phonon so that a micro-modulated phase forms, which is described as a periodic distortion of the parent cubic phase [14]. In Ni 2 MnGa, the premartensitic phase develops with little or no thermal hysteresis and is driven by a magnetoelastic coupling [18]. On further cooling, Ni 2 MnGa transforms to an approximately fivelayered quasi-tetragonal martensitic structure. The lowtemperature phase is incommensurate [14] with a period (0.43,0.43,0) and exhibits well-defined phasons best characterized as charge-density wave (CDW) excitations [16].In this paper we study the role of conduction electrons in the two-step MT in Ni 2 MnGa using photoemission spectroscopy and thermodynamic measurements. LEED and X-ray diffraction Laue measurements show the quality of our sample is appropriate for high-resolution photoemission spectroscopy. Ultraviolet photoemission (UPS) measurements show the opening of a pseudogap at 0.3 eV below the Fermi energy at the MT and provide further evidence that the Fer...