The transformation behaviour of AA2124 alloys reinforced with NiTi particulates of 10 vol pct and 20 vol pct has been studied by differential scanning calorimetry (DSC), thermoelectric power (TEP) and internal friction (IF). Addition of NiTi particulates increases the damping capacity as well as the precipitation kinetics of AA2124 composites with respect to the base AA2124. Heat treatments performed to change the matrix condition do not alter the transformation significantly, other than homogeneising the Al level in the particulates, which is present due to the preceding extrusion treatment. The presence of Al in NiTi stabilizes the R-phase transformation but the M_s remains stable.