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This study investigated the surface oxidation process of near equiatomic NiTi at elevated temperatures in air. The surface oxidation is found to involve the formation of several distinctive product layers in a particular sequence. The oxidation initiates by selective leaching of Ti from the alloy matrix to form an outer TiO2 layer, resulting in Ti depletion within the matrix and the formation of an inner TiNi3 layer. Further oxidation leads to the formation of a composite layer consisting of TiO2 and Ni(Ti) in between the outer TiO2 and the inner TiNi3 layers when the TiNi3 layer reaches a critical thickness. This marks the onset of a steady state oxidation with the continuous expansion of the composite layer and inward movement of the inner TiNi3 layer. The chemical reactions for the formation of various layers are identified and a diffusion-based physical model is proposed to explain the oxidation process. Surface oxidation resulted in the significant decrease of the latent heat and increase of the critical stress for inducing the martensitic transformation of the oxidised samples, due to the formation of oxidation-related layers and a significant Ti-depleted zone underneath.