A hot-rolled Ni-Ti-Fe alloy was subjected to marforming: approximately 8 pct reduction (in thickness) in the martensite phase by laboratory rolling. Before the next marforming step, the sample was annealed to bring back calorimetric signatures of reversible austenite-martensite phase transformation. Significant differences in microstructure could be achieved by combinations of marforming and annealing. Such differences, on the other hand, originated from the marformed microstructure: two distinct regions of remarkably different substructures. The difference was mainly through the relative presence of defects: micro-twins and dislocations. The regions of lower defect densities got textured gradually, with marforming steps, to γ (ND//h111i) fiber. The regions with high defect densities, on the other hand, provided non-γ fine clustered grains after annealing. Though debates may continue on the exact nature and origin of microtwins, the present study brought out their dominant role in determining almost all aspects of microstructural developments.