The effect of martensitic transformation on the debonding initiation in single shape memory NiTi wire- epoxy matrix composite was studied. Three different heat treatment cycles were performed in order to obtain wires with different transformation characteristics. The composite samples were prepared using NiTi wires and steel wire for comparison. The single-wire specimens were subjected to the pull-out test. The in situ observations of the interfacial debonding and sliding behaviour during the test were carried out. In the pull-out tests, the embedded length is usually small and the interfacial shear strength (IFSS) can be estimated by dividing the maximum force to the lateral surface. But for evaluating the phase transformation effect, a long embedded length is required. In this case, a new method must be developed to estimate the IFSS. In the present study, a new method has been developed for the long embedded wire length samples using an analytical model. The IFSS was determined by implementing the experimental results into the model. It has been observed that the debonding stress for NiTi wire is significantly less than that for steel wire. It can be associated with the difference between the elastic modulus of the wires. The interfacial shear strength was then determined for these systems. It has been experimentally found that, when there is no phase transformation the IFSS is about 9 MPa while it is about 14 MPa when the martensitic transformation/reorientation occurs in the reinforced wire.