Superplastic deformation of Al-Li 8090 alloy was carried out to study the effect of local strain developed on the microstructural variation along the gauge length of tensile specimens. For this, separate specimens were deformed to failure at a constant temperature of 530 °C and at the strain rates within the superplastic regime. The strain distribution was found to be non-uniform with more deformation towards fracture tip and less towards the shoulder section of specimens. The grain size was found to decrease with increase in local strain whereas cavity size and cavity volume fraction were found to increase. The cavity growth in longitudinal direction is suggested to be controlled by power law but the same in transverse direction is controlled by diffusional process. A model is proposed for cavity nucleation on the basis of inhomogeneity in microstructure and its implication in deformation mechanism. © 2002 Elsevier Science B.V. All rights reserved.