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The effect of annealing temperature on the microstructures and mechanical properties of Ti₅₀Ni₄₇Fe₃ (at. %) shape memory alloy was investigated by using a cold-rolled alloy sheet. For this purpose, a scanning electron microscope, electron backscatter diffraction, a transmission electron microscope, X-ray diffraction, tensile tests and Vickers hardness tests were used. The evolution of the microstructures, mechanical properties and fracture morphology of Ti₅₀Ni₄₇Fe₃ alloy was studied. The results show that the recovery occurs at an annealing temperature of 500 °C, and the recrystallization occurs at 600 °C. Because of the recrystallization at 600 °C, the <110>//RD texture disappears, and the intensity of the <111>//RD texture decreases; the alloy reaches its maximum elongation while maintaining a high strength, and at this annealing temperature, the alloy has excellent comprehensive mechanical properties. After the temperature exceeds 600 °C, the mechanical properties of the alloy decrease sharply. With the increase of the annealing temperature, the quantity and distribution of elliptical Ti₂Ni-phase particles show almost no specific changes. Additionally, with the increase of annealing temperatures to 600 °C, the fracture surface of Ti₅₀Ni₄₇Fe₃ alloys becomes flatter.