The influence of applied stresses and imposed plastic deformation on the martensitic transformation of a parent phase is described. Changes in mechanical properties such as flow stress, work hardening rate, fracture toughness, etc brought about by strain-induced martensitic transformation are briefly examined. In the absence of appreciable dislocation glide, atomic displacements associated with glissile boundaries are highly ordered and reversible modes of (plastic or nonlinear pseudoelastic) deformation. Such processes lead to large strains and are encountered in deformation twinning, martensitic transformations and in the reorientation of martensite units. The reversibility leads to phenomena such as elastic twinning, thermoelastic martensites, superelasticity, shape memory and two-way shape memory effects, and rubber-like behaviour. These are discussed using a unified approach based on thermoelastic equilibrium. The shape memory effect suggests several potential applications of the martensitic transformations in non-ferrous alloys in which the effect is most commonly observed. Recent developments in this area are reviewed with special reference to the prerequisites for the effect and the influence of metallurgical processing on the extent of shape recovery.