Superelasticity in Ni-Ti polycrystal is examined in terms of the second law of thermodynamics. As a consequence of the law, both the phase equilibrium and the dissipation of mechanical energy during the stress-induced martensitic transformation have been formulated simultaneously by means of the Clausius-Duhem inequality. The flow stress of superelasticity has been derived as the function of temperature. The energy dissipated in the shape memory effect is briefly discussed.