The deformation behavior under uniaxial compression of NiTi containing 0, 10, and 20 vol pct TiC participates is investigated both below and above the matrix martensitic transformation temperature: (1) at room temperature, where the martensitic matrix deforms plastically by slip and/or twinning; and (2) at elevated temperature, where plastic deformation of the austenitic matrix takes place by slip and/or formation of stress-induced martensite. The effect of TiC particles on the stress-strain curves of the composites depends upon which of these deformation mechanisms is dominant. First, in the low-strain elastic region, the mismatch between the stiff, elastic particles and the elastic-plastic matrix is relaxed in the composites: (1) by twinning of the martensitic matrix, resulting in a macroscopic twinning yield stress and apparent elastic modulus lower than those predicted by the Eshelby elastic load-transfer theory; and (2) by dislocation slip of the austenitic matrix, thus increasing the transformation yield stress, as compared to a simple load-transfer prediction, because the austenite phase is stabilized by dislocations. Second, in the moderate-strain plastic region where nonslip deformation mechanisms are dominant, mismatch dislocations stabilize the matrix for all samples, thus (1) reducing the extent of twinning in the martensitic samples or (2) reducing the formation of stressinduced martensite in the austenitic samples. This leads to a strengthening of the composites, similar to the strain-hardening effect observed in metal matrix composites deforming solely by slip. Third, in the high-strain region controlled by dislocation slip, weakening of the NiTi composites results, because the matrix contains (1) untwinned martensite or (2) retained austenite, which exhibit lower slip yield stress than twinned or stress-induced martensite, respectively.