Deformation behavior and microstructure evolution of NiTiCu shape memory alloy (SMA), which possesses martensite phase at room temperature, were investigated based on a uniaxial compression test at the temperatures of 700~1000 • C and at the strain rates of 0.0005~0.5 s −1 . The constitutive equation of NiTiCu SMA was established in order to describe the flow characteristic of NiTiCu SMA, which is dominated by dynamic recovery and dynamic recrystallization. Dislocations become the dominant substructures of martensite phase in NiTiCu SMA compressed at 700 • C. Martensite twins are dominant in NiTiCu SMA compressed at 800 and 900 • C. Martensite twins are not observed in NiTiCu SMA compressed at 1000 • C. The microstructures resulting from dynamic recovery or dynamic recrystallization significantly influences the substructures in the martensite phase of NiTiCu SMA at room temperature. Dislocation substructures formed during dynamic recovery, such as dislocation cells and subgrain boundaries, can suppress the formation of twins in the martensite laths of NiTiCu SMA. The size of dynamic recrystallized grains affects the formation of martensite twins. Martensite twins are not easily formed in the larger recrystallized grain, since the constraint of the grain boundaries plays a weak role. However, in the smaller recrystallized grain, martensite twins are induced to accommodate the transformation from austenite to martensite.