The shape memory properties of Ni–Al alloy are investigated using molecular dynamics simulation. The phase transformation behaviors for various Ni composition ratios are studied under quasistatic cooling and heating process. Various loadings, i.e., uniaxial, shear, and biaxial, are applied on a 68% Ni–Al alloy till plasticity takes place. The atomic configurations are inspected and analyzed using a common neighbor parameter. The shape recovery capability of the plastically deformed alloy is examined after heating above the phase transformation temperature. It is found that there would be shape recovery if the twinning plane reorientation or moving was the major yielding mechanism. For those loadings in which stacking faults or dislocations nucleate, the deformed model would not restore to its original shape after heating and the corresponding maximum shear stress is noticeably higher. There is no direct dependence between the yield strain and the shape recovery capability. Our findings could provide a possible explanation for the functional fatigue of the polycrystalline shape memory alloy.