The effects of quenched-in vacancy concentration and precipitation of Ni5Al3 have been studied in rapidly solidified (melt spun) Ni-34at.% Al using differential scanning calorimetry (DSC) and transmission electron microscopy (TEM). Slow heating of melt spun ribbon produces precipitation in the martensite and subsequently inhibits reversible martensitic transformation. In contrast, rapid initial upquenching to 550°C results in vacancy annihilation accompanying precipitation in the β phase on holding, and allows reversible martensitic transformation during subsequent cycling. This reversibility was confirmed at least for 50 complete transformation cycles. However, a slight rise in transformation temperatures was observed with transformation cycling of samples displaying reversible transformation. In addition to inhibition of transformation by slow heating after melt spinning, 'transient' stabilization of martensite was observed following elimination of inhibition by upquenching. It is concluded that vacancy concentration and vacancy annihilation, coupled with precipitation, play major roles in the occurrence of the inhibition effect, as well as having a strong influence on martensite stabilisation. © 1999 Elsevier Science S.A.