Acoustic emission (AE) generated during tensile deformation of notched specimens with varying notch lengths has been compared with those from unnotched specimens of a nuclear grade AISI type 304 stainless steel in the 5 and 30% pre-strained conditions. The results indicate that (a) nature of AE generation is different for different stages of deformation and (b) amount of cold work or pre-strain influences the magnitude of such AE generation. The observed results have been explained using the phenomena of varied localized deformation at the notch tip and deformation-induced alpha'-martensite formation in cold worked AISI type 304 stainless steel. An examination of the correlation between total AE counts (N) and stress intensity factor (K) has shown that the value of the exponent (m) in the relationship N = AK(m) decreases with increasing pre-strain. The formation of alpha'-martensite in unnotched specimens has been confirmed by equivalent delta-ferrite (%) content measurements. The examination of fracture surfaces by scanning electron microscopy (SEM) has indicated that the localized plastic deformation at the notch tip depends on the level of pre-strain.