Based on the principle of improving shape memory effect (SME) in Fe-based alloys by directional precipitation of carbides induced by γ/ɛ interfaces, the effects of deformation temperature on the γ/ɛ interfaces, carbides precipitation after ageing and SME of an Fe13.53Mn4.86Si8.16Cr3.82Ni0.16C alloy were investigated. The results show that through controlling the amount and direction of γ/ɛ interfaces, the amount and direction of Cr 23 C 6 carbides after subsequent ageing can be controlled. An optimal amount and directionality of carbides for best SME are obtained after deformation at 238K. Lots of Cr 23 C 6 carbides can increase the strength of austenite and prevent slip deformation. Meanwhile, after deformation again, martensite plates have the uniform direction because Cr 23 C 6 with optimal directionality and their resultant strain fields can prevent the collisions between martensite bands belonging to different areas. Thus, the reversibility of stress-induced martensite can be remarkably improved and the SME is further improved.