A model of plastic deformation of the shape memory alloys which describes dislocation slip at the microlevel is developed. A condition similar to the Schmid law was adopted for the determination of dislocation slip onset. A description of the interaction of plastic deformation and martensitic transformations by taking into account the densities of deformation defects is proposed. It is shown that the model can correctly describe the effect of plastic strain on the shape memory effect. The proposed model is also capable of describing the two-way shape memory effect.