In the present work, 1 at% Y was added to Ti-50.7at%Ni alloy to prepare Ti-50.2Ni-1Y alloy and the effects of rare earth Y addition on the microstructure and martensitic transformation behavior of Ti-50.7at%Ni alloy was investigated by optical microscope, scanning electronic microscope (SEM) X-ray diffraction (XRD) and differential scanning calorimetry (DSC). The results show the microstructure of Ti-50.2Ni-1Y alloy is different with that of Ti-50.7at.%Ni alloy, and its microstructure consists of B19' martensite and the Y-rich phase, which may be YNi phase. One-step martensitic transformation occurs in Ti-50.2Ni-1Y ternary alloy. The phase transformation temperatures increase rapidly with Y addition, and the increase of Ms is about 85 degrees C.