The effect of martensitic transformation on the debonding propagation in single Ni–Ti shape memory wire epoxy matrix composite was investigated. In order to obtain wires with different transformation charac- teristics three different heat treatment cycles were performed. The in-situ observations of the interfacial debonding and sliding behaviour during pull-out tests were carried out. From in-situ observations, the debonding begins from the wire entry point and proceeds to the embedded end. When there is no phase transformation the debonding propagates rapidly whilst it is slow when there is wire phase transformation or martensitic reorientation. In the case where the debonding begins at the applied stress less than the transformational stress, the debonding rate decreases as soon as the wire phase transformation takes place. It is found that the debonding rate depends on the displacement rate as well as on the length change during phase transformation.