Laser powder bed fusion (L-PBF), categorized as additive manufacturing technique, has a capability to fabricate NiTi (Nitinol) shape memory alloys with tailorable functional properties and complex geometries. An important processing parameter, hatch distance (h), is often related to macroscale structural defects; however, its role on controlling the microstructure and functional properties is usually underestimated in L-PBF of NiTi. In this work, equiatomic NiTi (50.0 at% Ni) parts were fabricated with various hatch distances to tailor the microstructure and their shape memory characteristics. Contrary to what is observed in Ni-rich NiTi alloys, in this work, we demonstrate that phase transformation temperatures of L-PBF equiatomic NiTi do not decrease proportionally with hatch distance but rather relate to a critical hatch distance value. This critical value (120 μm) is derived from the synergistic effect of thermal stress and in situ reheating. Below this value, epitaxial grain growth and in situ recrystallization are enhanced, while above, irregular grains are formed and dislocations induced by thermal stresses decrease. However, the critical value found herein is characterized by high dislocation density and fine grain size, resulting in a superior thermal cyclic stability. The proposed finite element model is proven to be an effective tool to understand and predict the effect of hatch distance on grain morphology and dislocation density evolutions in L-PBF NiTi SMAs. In the present study, we provide a comprehensive understanding for in situ controlling L-PBF NiTi microstructure and functional characteristics, which contributes to designing 4-dimensional shape memory alloys.