It is well known that during tensile testing, a part of the mechanical work done on the specimen is transformed into heat energy. However, the ultimate temperature rise and the rate of temperature rise is related to the nature of the material, conditions of the test and also to the deformation behaviour of the material during loading. The recent advances in infrared sensors and image/data processing techniques enable observation and quantitative analysis of the heat energy dissipated during such tensile tests. In this study, infrared imaging technique has been used to characterise the tensile deformation in AISI type 316 nuclear grade stainless steel. Apart from identifying the different stages during tensile deformation, the technique provided an accurate full-field temperature image by which the point and time of strain localization could be identified. The technique makes it possible to visualise the region of deformation and failure and also predict the exact region of fracture in advance. The effect of thermal gradients on plastic flow in the case of interrupted straining revealed that the interruption of strain and restraining at a lower strain rate not only delays the growth of the temperature gradient, but the temperature rise per unit strain decreases. The technique is a potential NDE tool that can be used for on-line detection of thermal gradients developed during extrusion and metal forming process which can be used for ensuring uniform distribution of plastic strain.