The Hot deformation and martensitic transformation behaviors of Fe-32%Ni alloy was investigated by measurements of electrical resistance and X-ray diffraction. With the increase in strain, the austenite goes through from the work-hardened to the partial dynamically re-crystallized and then to the completed dynamically re-crystallized. The martensitic transformation characteristics depend on the austenite states. The work-hardening in small strain is helpful to martensitic transformation due to the low dislocation density and little lattice distortion, while the high dislocation density and severe lattice distortion by the increase in strain will hinder the martensitic nucleation. Once dynamic re-crystallization (DRX) takes place, the martensitic transformation will be enhanced again, which is related to the heterogeneous dynamic substructures. The growing DRX grain can enhance the martensitic nucleation due to the low dislocation density near its grain boundary. The Hot deformation and martensitic transformation behaviors of Fe-32% Ni alloy was investigated by measurements of electrical resistance and X-ray diffraction. With the increase in strain, the austenite goes through from work-hardened to the partially dynamically re-crystallized and then to the completed dynamically re-crystallized. The martensitic transformation characteristics depend on the austenite states. The work-hardening in small strains is helpful to martensitic transformation due to the low dislocation density and little lattice distortion, while the high dislocation density and severe lattice distortion by the increase in strain will hinder the martensitic nucleation. Once dynamic re-crystallization (DRX) takes place, the martensitic transformation will be enhanced again, which is related to the heterogeneous dynamic substructures. The growing DRX grain can enhance the martensitic nucleation due to the low dislocation density near its grain boundary.