The phase transformation behavior and microstructural evolution of the Ti-19.5Zr-10Nb-0.5Fe alloy upon heating and cooling have been investigated by X-ray diffraction spectroscopy, differential scanning calorimetry, thermal dilatation and transmission electron microscopy. The results show that the Ti-19.5Zr-10Nb-0.5Fe alloy is mainly composed of the orthorhombic α″-martensite phase as well as a small amount of β-phase at room temperature. The reverse transformation of the α″-martensite phase to the β-phase occurs at 429 K and finishes at 449 K. The nanoscale hexagonal ω-phase particles continuously precipitate at approximately 533 K and co-exist with the β-phase even up to 593 K. When heated to 683 K, the acicular α-phases nucleate at the interfaces between the coarsened ω-phase precipitate and β-phase, and then grow up at the expense of the ω-phase and β-phase with the increasing temperature up to 773 K. The fraction of α-phase decreases during the subsequent heating, leaving the β-phase exclusively remained at 873 K. Upon cooling from 873 K, the β-phase partially transforms into the α″-martensite phase. The measurements of the microhardness indicate the hardening effect of the ω-phase precipitate and accord with the phase evolution behavior in the Ti-19.5Zr-10Nb-0.5Fe alloy.