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The fracture toughening mechanism of shape memory alloys is studied analytically. The asymptotic stress analysis of shape memory alloys under mode I loads is carried out using the Eshelby inclusion method and the weight function method. The toughening mechanism due to martensite transformation of shape memory alloys is investigated on the basis of the crack shielding theory of fracture mechanics. The transformation boundaries for static and steady advanced cracks are also determined. The analytic results show that the martensite transformation reduces the crack tip stress intensity factor and increases the toughness. The toughness of shape memory alloys is enhanced by the transformed strain fields which tend to limit or prevent crack opening and advancing.