Lattice defects are introduced into stable austenite (beta) by hot rolling up to 70% (in one pass) in a temperature range between 900 > T-AF > 340 degrees C (ausforming (AF)). The changes in microstructure, thermal transformation behavior, as well as normal and anomalous properties in stress-, strain-, and temperature-space were studied. Martensitic transformation temperatures are lowered with decreasing deformation temperature and increasing amount of deformation. A two-stage reaction is induced at T-AF less than or equal to 400 degrees C Deformation twins are the predominant microstructural feature, in addition to dislocations at T-AF less than or equal to 700 degrees C. Highly elongated grains indicate that long-range recrystallization is absent at all ausforming temperatures. Semicoherent pecipitation in addition to high dislocation densities are likely to be responsible for the premartensitic anomalies of thermal transformation for T-AF less than or equal to 400 degrees C. Ausforming leads to a considerable increase in conventional strength properties (yield stress, tensile strength, elongation) without loss of transformability and, consequently, shape memory or pseudo-elasticity.