Abstract: Transmission electron microscopy, electrical resistivity measurements and mechanical testing were employed to investigate the evolution of microstructure and functional superelastic properties of 0.1 mm diameter as-drawn NiTi wires subjected to a non-conventional heat treatment by controlled electric pulse currents. This method enables a better control of the recovery and recrystallization processes taking place during the heat treatment and accordingly a better control on the final microstructure. Using a stepwise approach of millisecond pulse annealing, it is shown how the microstructure evolves from a severely deformed state with no functional properties to an optimal nanograined microstructure (2050 nm) that is partially recovered through polygonization and partially recrystallized and that has the best functional properties. Such a microstructure is highly resistant against dislocation slip upon cycling, while microstructures annealed for longer times and showing mostly recrystallized grains were prone to dislocation slip, particularly as the grain size exceeds 200 nm.