A previously developed micro-structural model of the deformation of a polycrystal is supplemented with equations for accumulation of the two types of defects produced by deformation: reversible and irreversible ones. These relations constitute a set of ordinary differential equations for defect densities, which are solved by numerical time-step integration. A new stress-strain criterion accounting for the effect of deformation defects, tangential stress on a slip plane and of the first invariant of the stress tensor on fracturing of the material is proposed. With these tools deformation and failure of austenitic TiNi shape memory alloy samples under one-side and cyclic (with constant strain or stress amplitude) tension, compression and shear straining are simulated. Calculations show that the dependence of the strain amplitude on the number of cycles to failure has two sections, in each there is a power dependence of the Coffin-Manson type with different exponents.