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 B2↔R transformation. The B2↔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.