Medical grade Ni-Ti alloys with shape memory or pseudo-elastic behavior exhibit good biocompatibility because of an electrochemically passive oxide layer on the surface. In this work, the mechanical stability of surface oxide layers is investigated during reversible pseudo-elastic deformation of commonly applied medical grade Ni-Ti wires. Surface oxide layers with varying thickness were generated by varying annealing times under air atmosphere. The thicknesses of the surface oxide layers were determined by means of Rutherford backscattering spectrometry. In situ scanning electron microscopy investigations reveal a damage mechanism, which is assumed to have a significant influence on the biocompatibility of the material. The conditions that lead to the appearance of cracks in the surface oxide layer or to the flaking of surface oxide layer particles are identified. The influence of the thickness of the surface oxide layer on the damage mode is characterized. The possible impact of the damaged surface oxide layer on the material's biocompatibility and the potentials to reduce or avoid the damage are discussed.