Using DSC, TEM and compress test, the effect of deformation on martensitic transformation and microstructure of the Ni-Mn-Ga alloy has been investigated. The mechanism of increase of martensitic transformation hysteresis after optimum plastic deformation has been discussed by thermodynamics and kinetics of martensitic transformation. The results show that the martensitic transformation temperatures keep constant, but reverse transformation temperatures sharply increase with an increase of the pre-deformation strain. The increase of transformation hysteresis in the alloy is mainly due to the release of the elastic energy deposited at the boundary induced by the plastic deformation.