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.