Abstract: By metallographic examination and transmission electron microscope analysis, the effects of martensite phase transformation and dislocation multiplication of austenitic 304 stainless steel during the tensile strain process were investigated. Ferritic detector and metal magnetic memory technology were used to analyze the distribution of martensite phase in specimen and the distribution of magnetic density on the specimen surface, respectively. The results showed that a corresponding relation existed between the martensite phase distribution and magnetic density distribution of austenite 304 stainless steel containing deformation induced martensite transformation. The magnetic density change can reflect the morphology change and stress concentration in material. Metal magnetic memory technology can be used to analyze the microstructure change of austenite 304 stainless steel. The stress concentration position can be diagnosed effectively.