Neutron diffraction is an ideal tool for the study of stress induced martensitic transformation. The method is well established for the measurement of internal stress in two phase materials, since its selectivity allows the partitioning of stress between phases and grain families to be determined. A material undergoing a stress induced phase transformation is an example of a two phase material in which the volume fractions vary during the loading history; as such, internal stress plays a crucial role in its mechanical behaviour. In addition to the determination of internal stress, the neutron method gives information on the evolving texture of the material, and thus the preferred martensite variants which develop under loading. Moreover, by Rietveld refinement of the diffraction spectra, phase volume fractions may be determined. This paper presents results and analysis of neutron diffraction studies into stress induced martensitic transformation. In Fe-Ni-C TRIP (TRansformation Induced Plasticity) steel, the development of internal stress under uniaxial tensile loading reveals the reinforcing role of the growing martensite phase. The observed load transfer contributes to the strain hardening of the material, suppressing strain localisation and preventing necking. This identifies the role of internal stress in the origin of TRIP. Moreover, the evolution of texture shows that austenite grains with <100> parallel to the tensile axis transform preferentially. The data is interpreted using a model based on infinitesimal deformation theory.