This study investigates the effect of thermo-mechanical treatment on the damping capacity of the Fe-20Mn-12Cr- 3Ni-3Si alloy with deformation induced martensite transformation. Dislocation, αʹ and ε-martensite are formed, and the grain size is refined by deformation and thermo-mechanical treatment. With an increasing number cycles in the thermo-mechanical treatment, the volume fraction of ε-martensite increases and then decreases, whereas dislocation and α'-martensite increases, and the grain size is refined. In thermo-mechanical treated specimens with five cycles, more than 10 % of the volume fraction of ε-martensite and less than 3 % of the volume fraction of αʹ-martensite are attained. Damping capacity decreases by thermomechanical treatment and with an increasing number of cycles of thermo-mechanical treatment, and this result shows an opposite tendency for general metal with deformation induced martensite transformation. The damping capacity of the thermomechanical treated damping alloy with deformation induced martensite transformation greatly affect the formation of dislocation, grain refining and α'-martensite and then ε-martensite formation by thermo-mechanical treatment.