To analyze the variant selection of martensite lath from austenite grains, an Fe -20.2 mass% Ni - 5.4 mass% Mn alloy was observed. The crystallographic relationship between the laths and the austenite grain boundary were analyzed by the trace analysis combined with Kikuchi diffraction. The martensite laths nucleate preferentially at high angle tilt boundaries and annealing twin boundaries of the austenite. There is a strong tendency that martensite laths of a single Kurdjumov-Sachs (K-S) variant are formed at an austenite grain boundary. It was found that the following variant selection rules are dominant; 1) martensite laths appear from tilt austenite grain boundaries and annealing twin boundaries, 2) martensite laths held K-S OR with austenite and the other austenite grains, 3) the parallel closed packed direction of the K-S relationship held by the martensite lath is close to parallel to the austenite grain boundaries and 4) the transformation shear and misfit strain can be accommodated effectively along the austenite grain boundaries or by slip in the other austenite grain.