In recent years, there has been an increasing interest in magnetic shape memory alloys (MSMAs) due to their unique ability to produce very large output strains and rapid response frequency. NiMnCoIn is a new-type MSMAs in which a reversible magnetic-field-induced phase transformation is observed. The microstructural evolution in the process of dynamic recrystallization in polycrystalline Ni45Co5Mn36.7In13.3 was studied in the present paper. The experimental results showed that the high deformation temperature and slow strain rate were necessary to achieve perfect dynamic-recrystallizing microstructure in Ni45Co5Mn36.7In13.3 alloy. Precipitates with two sizes were observed. The content of Co in precipitates was higher than that in the matrix alloy, while the content of In was lower than that in the matrix alloy.