**Abstract** : In an earlier work, Elliott et al. (JMPS 54(1):161--192, 2006), the authors used temperature-dependent atomic potentials and path-following bifurcation techniques to solve the nonlinear equilibrium equations and find the temperature-induced martensitic phase transformations in stress-free, perfect, equi-atomic binary B2 crystals. Using the same theoretical framework, the current work adds the influence of stress to study the model's stress-induced martensitic phase transformations. The imposition of a uniaxial Biot stress on the austenite (B2) crystal, lowers the symmetry of the problem, compared to the stress-free case, and leads to a large number of stable equilibrium paths. To determine which ones are possible reversible martensitic transformations, we use the (kinematic) concept of the maximal Ericksen-Pitteri neighborhood (max EPN) to select those equilibrium paths with lattice deformations that are closest, with respect to lattice-invariant shear, to the austenite phase and thus capable of a reversible transformation. It turns out that for our chosen parameters only one stable structure (distorted aIrV) is found within the max EPN of the austenite in an appropriate stress window. The energy density of the corresponding configurations shows features of a stress-induced phase transformation between the higher symmetry austenite and lower symmetry martensite paths and suggests the existence of hysteretic stress-strain loops under isothermal load-unload conditions. Although the perfect crystal model developed in this work over-predicts many key material properties, such as the transformation stress and the Clausious-Clapeyron slope, when compared to real experimental values (based on actual polycrystalline specimens with defects), it is---to the authors' knowledge---the first atomistic model that has been demonstrated to capture all essential trends and behaviorobserved in shape memory alloys.