Abstract: Superelastic deformation of thin NiTi wires containing various nanograined microstructures was investigated by tensile cyclic loading with in situ evaluation of electric resistivity. Defects created by the superelastic cycling in these wires were analyzed by transmission electron microscopy. The role of dislocation slip in superelastic deformation is discussed. NiTi wires having finest microstructures (grain diameter <100 nm) are highly resistant against dislocation slip, while those with fully recrystallized microstructure and grain size exceeding 200 nm are prone to dislocation slip. The density of the observed dislocation defects increases significantly with increasing grain size. The upper plateau stress of the superelastic stressstrain curves is largely grain size independent from 10 up to 1000 nm. It is hence claimed that the HallPetch relationship fails for the stress-induced martensitic transformation in this grain size range. It is proposed that dislocation slip taking place during superelastic cycling is responsible for the accumulated irreversible strains, cyclic instability and degradation of functional properties. No residual martensite phase was found in the microstructures of superelastically cycled wires by TEM and results of the in situ electric resistance measurements during straining also indirectly suggest that none or very little martensite phase remains in the studied cycled superelastic wires after unloading. The accumulation of dislocation defects, however, does not prevent the superelasticity. It only affects the shape of the stressstrain response, makes it unstable upon cycling and changes the deformation mode from localized to homogeneous. The activity of dislocation slip during superelastic deformation of NiTi increases with increasing test temperature and ultimately destroys the superelasticity as the plateau stress approaches the yield stress for slip. Deformation twins in the austenite phase ({1 1 4} compound twins) were frequently found in cycled wires having largest grain size. It is proposed that they formed in the highly deformed B19′ martensite phase during forward loading and are retained in austenite after unloading. Such twinning would represent an additional deformation mechanism of NiTi yielding residual irrecoverable strains.