The effects of ${varepsilon}$ martensite content and strain amplitude on damping capacity of an Fe-17%Mn alloy have been studied to establish damping mechanism of Fe-Mn system corresponding to the magnitude of strain amplitude. In a range of $1{ imes}10^{-4}{sim}3{ imes}10^{-4}$ strain amplitude, the damping capacity is linearly proportional to the ${varepsilon}$ martensite content, which suggests that stacking faults and ${varepsilon}$ martensite variant boundaries are the principal damping sources. In the range of $4{ imes}10^{-4}{sim}6{ imes}10^{-4}$ strain amplitude, however, a maximum damping capacity is observed around 68 vol.% ${varepsilon}$. This behavior is very similar to dependence of relative area of ${gamma}/{varepsilon}$ interface on ${varepsilon}$ martensite content. This means that in this strain range, ${gamma}/{varepsilon}$ interface acts as damping source in addition to the stacking faults and variant boundaries in Fe-17%Mn alloy.