This study investigated the effect of internal stress coupling on the deformation behavior of an NiTi matrix-Nb nanowire composite. It is found that residual internal stresses between the nanowires and matrix was created due to the mismatch between the elastic recovery strain of the Nb nanowires and the phase transformation strain of the NiTi matrix. These internal stresses affect the deformation behavior in subsequent deformation cycles, and the effect is dependent on the volume fraction of the nanowires.