Proper amount of blend rare earth (RE), e.g. less than 0.2 wt%, was added into a Fe25Mn6Si5Cr alloy and showed beneficial effect on its shape memory property. On the other hand, measurements of internal friction revealed that RE-addition reduces the Ms temperature and the amount of thermal-induced martensite. Higher La-content in thin hcp (e) plates than that in fcc (g) matrix was observed by analytical TEM. Thermodynamic calculations also indicated a relatively high equilibrated concentration in e and a strong interaction between La atom and 1/6<112> Shockley dislocation. Except for the grain refinement and solid-solution strengthening effect, the influence of RE on the g ® e martensitic transformation is discussed in taking into account both the Suzuki Effect and Suzuki Lock. The former results in a reduced stacking fault energy, while the Suzuki Lock hinders the movement of Shockley partials and thus the extension of stacking faults.