Large magnetic field-induced strains can be achieved in modulated martensite for Ni-Mn-In alloys; however, the metastability of the modulated martensite imposes serious constraints on the ability of these alloys to serve as promising sensor and actuator materials. The phase stability, magnetic properties, and electronic structure of the modulated martensite in the Ni2Mn1.5In0.5 alloy are systematically investigated. Results show that the 6M and 5M martensites are metastable and will eventually transform to the NM martensite with the lowest total energy in the Ni2Mn1.5In0.5 alloy. The physical properties of the incommensurate 7M modulated martensite (7M–IC) and nanotwinned 7M martensite (7M−(52¯)2) are also calculated. The austenite (A) and 7M−(52¯)2 phases are ferromagnetic (FM), whereas the 5M, 6M, and NM martensites are ferrimagnetic (FIM), and the FM coexists with the FIM state in the 7M–IC martensite. The calculated electronic structure demonstrates that the splitting of Jahn–Teller effect and the strong Ni–Mn bonding interaction lead to the enhancement of structural stability.