We investigated the microstructural evolution during tensile deformation of ZrCo and ternary Zr-Co-Ni alloys with the aim of clarifying the mechanism of enhancement of ductility in these alloys. Some long and slender microcracks were present perpendicular to the tensile direction on the surface of specimen with a nominal strain of 13%. There was an increase in not only the occurrence of microcracks but also the width of the microcracks with increasing nominal strain. The preferred sites for microcrack nucleation occurred at the grain boundaries and along the interface between the B2 parent phase and the Zr 2Co precipitates. Parts of the martensitic interface caused by tensile deformation acted as the preferred formation sites for the microcracks. Consequently, we consider that the remarkable enhancement of the ductility of the B2-type Zr-Co-Ni alloy is originated from the relaxation of stress concentration due to the microcrack formation, in addition to the transformation-induced plasticity associated with the deformation-induced martensite. © 2013 Elsevier Ltd. All rights reserved.