Localized oxidation and corrosion behavior of a nickel-titanium (NiTi) shape memory alloy (SMA) was investigated via static immersion experiments in a simulated body fluid solution. Detailed electron microscopy examinations on the sample surfaces revealed preferential formation of local oxide particles around dislocation networks, which constitute high-energy zones. Moreover, various intermediate phases were detected in addition to the parent NiTi phase around dislocation networks. These are also areas with enhanced diffusion, which promotes Ni release. These findings emphasize the significant role of fine microstructural features, such as dislocation networks, on the oxidation and Ni release, and thus, the biocompatibility of the NiTi SMAs.