Electron backscattered diffraction analysis has been used to investigate the effect of shear deformation on microstructural evolution of a Ni-30Fe alloy during hot deformation. The alloy was compressed by 50% or 75% in thickness at a strain rate of 1/s in a single pass at 1023K using a hot compression simulator. Three-dimensional finite element analysis was carried out to evaluate inhomogeneous strain distribution introduced in the specimens by the simulator. As the equivalent strain increased, the fraction of high angle grain boundaries (HAGBs) with misorientaions between 15o and 30o increased almost in the similar way regardless of the presence of shear strain. The fraction of HAGBs having misorientations in excess of 30o increased mainly at the expense of low angle grain boundaries with misorientations smaller than 15o. Such the expense occurred at much higher rate with shear strain than without shear strain. The shear component is effective to develop HAGBs in austenite grain interiors.