To understand the deformation mechanism and microstructure evolution of TC16 titanium alloy during cold heading, cold compression tests were conducted using a Gleeble 3800 thermo-mechanical simulator. The effects of strains (0.2, 0.4, 0.6, 0.8 and 1.0) and strain rates (0.1, 1.0 and 10.0 s^-1) on the deformation behavior and microstructure evolution of the alloys were investigated. Results show that larger true strain and higher strain rate are prone to cause local grain coarsening and adiabatic shear bands within the material. True strain should be selected in the range from 0.2 to 0.6. Uniform structure and fine grains that are suitable for cold forming can be achieved at a strain rate of 1.0 s^-1. The deformation softening observed during cold deformation is caused mainly by adiabatic temperature rise and local grain coarsening at larger true strains and higher strain rates.