Fe–Mn–Si-based shape memory alloys (Fe-SMAs) have attracted much research attention due to their potential applications for vibration mitigation, energy dissipation, and re-centering in the construction sector. Because of the crucial impact of precipitation on the pseudoelasticity (PE) behavior of Fe-SMAs, the equilibrium phase diagram of an Fe–17Mn–5Si–10Cr–4Ni–1(V-C) (wt%) SMA was used in this study to identify a low-temperature precipitate and study its effect on the microstructure and PE of the alloy after a low-temperature aging process. Transmission electron microscopy (TEM) studies revealed that aging at 485 °C for 6 h after aging at 750 °C for 6 h led to the precipitation of fresh, parallelogram-shaped, (Cr–V–C)-rich precipitates along with elliptical-shaped, V-rich precipitates in the austenite grains of the recrystallized samples. Numerous parallel stacking faults (SFs) were formed due to the presence of the precipitates within the austenite grains. It is postulated that such an arrangement of SFs can further improve the PE by reducing the activation energy for the nucleation of ɛ-martensite laths and inhibiting them from colliding with each other and consequent formation of α'-martensite, resulting in a residual strain reduction to 2.7% after 4.0% tensile straining.