Development of nanoscale actuators and sensors in recent years calls for functional materials with small dimensions and high strengths. High strength nanocrystalline NiTi alloys which experience the R-phase transformation with a small thermal hysteresis are ideal candidates for these applications. To facilitate the application of the R-phase transformation in nanocrystalline NiTi alloys, this study investigated the effect of grain size on the R-phase transformation of a nanocrystalline Ti-50.2at.%Ni alloy. The nanometric grain size was created by severe cold deformation and low temperature anneal. It was found that in the recrystallized state, achieving nanoscale grain sizes (< 100 nm) was effective in suppressing the B2 -> B19' martensitic transformation and revealing the B2a dagger"R transformation. The B2a dagger"R transformation temperature was found to increase with the decreasing grain size within the range of 22-155 nm. The suppression of the B19' martensite in nanograins is attributed to the limited space within the grains to allow the formation of self-accommodation structures to contain the large lattice distortion of the martensite.