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