Minimizing phase transformation (PT) hysteresis is of crucial importance for reliability of shape memory alloy (SMA)-based devices, where the lattice strain/stress caused by thermal hysteresis leads to functional degradation. As a result, understanding structural factors that control PT pathway is critical for development of materials with high reversibility. In this study, two distinct PT mechanisms (from gamma(1) martensite to beta(1) austenite phase) in Cu-Al-Ni SMAs were revealed by in-situ TEM observation. A growth-dominant conventional PT mechanism shows in the fast quench sample, whereas a nucleation-dominant PT mechanism that suppresses interface propagation and induces high thermal hysteresis displays in the slow quench sample. By characterizing the atomic scale composition and microstructure we discover that slow quenching induces nanoprecipitation that changes chemistry of the matrix alloy, which in turn causes the higher PT hysteresis and temperature, while fast quenching avoids the formation of these nanoprecipitates. Our finding provides valuable insights into the fabrication of SMAs with better reliability.