Austenite(γ) grain size, ε martensite volume fraction and damping capacity of Fe-17%Mn alloy have been investigated as a function of solution treatment temperature of 600℃ to 1100℃. With increasing the solution temperature, γ grain size, ε martensite content and damping capacity are increased, while the hardness is decreased. When γ grains are small. ε plates grow in only one direction in each γ grain. However, if the γ grains are large in accordance with high solution treating temperature, several ε variants with different orientations are formed and intersected each other in each y grain. In spite of small ε martensite content, the damping capacity of the specimen which was annealed at 700℃, followed by subzero treatment at -196℃, is almost equal to that of the specimen annealed at 1000℃ and subsequently quenched to room temperature. From this result it is suggested that the damping capacity of Fe-17%Mn alloy having fine γ grains is mainly attributed to the movement of γ/ε interface without the operation of other damping sources such as ε/ε boundaries and stacking faults in ε reported previously.