The changes in damping capacity with volume fractions of thermal and deformation-induced ${\varepsilon}$ martensites were compared and analyzed in an Fe-23%-Mn alloy. The volume fraction of thermal ${\varepsilon}$ martensite increased with decreasing cooling temperature, whereas that of deformation-induced ${\varepsilon}$ martensite increased steeply up to 10%- of cold rolling and nearly saturated in further cold rolling. In the case of thermal ${\varepsilon}$ martensite, the damping capacity increased linearly with the increase in ${\varepsilon}$ martensite content. For the deformation-induced ${\varepsilon}$ martensite, however, the damping capacity increased continuously up to 70%- of ${\varepsilon}$ martensite, over which it decreased suddenly. TEM microstructures showed that the deterioration of damping capacity above 70%- of deformation-induced ${\varepsilon}$ martensite is ascribed to the introduction of perfect dislocations, which play a important role in inhibiting the movement of damping sources such as stacking fault boundaries inside ${\varepsilon}$ martensite, ${\varepsilon}$ martensite variant boundaries and ${\gamma}/{\varepsilon}$ interfaces.