The transformation characteristics of equi-atomic GdCu have kn studied by acoustic emission analysis and microstructural examinations during and after several heating and cooling sequences through the phase transformation range. Acoustic emission was recorded during both the forward and the reverse transitions. Two different sources of acoustic emission were active during the first cooling stage, while only one of them appeared on the successive heating and cooling sequences. A huge and striking cracking phenomenon was observed when the same specimen was cycled through the forward and the reverse transformations. From one thermal sequence to another, cracks propagate and some of them also widen significantly. These new experimental findings are discussed as to the martensitic nature of the phase transformation in GdCu.