Magnetocaloric materials based on field-induced first order transformations such as Ni-Mn-Ga-Co are promising for more environmentally friendly cooling. Due to the underlying martensitic transformation, a large hysteresis can occur, which in turn reduces the efficiency of a cooling cycle. Here, we analyse the influence of the film microstructure on the thermal hysteresis and focus especially on large angle grain boundaries. We control the microstructure and grain boundary density by depositing films with local epitaxy on different substrates: Single crystalline MgO(0 0 1), MgO(1 1 0) and Al2O3(0 0 0 1). By combining local electron backscatter diffraction (EBSD) and global texture measurements with thermomagnetic measurements, we correlate a smaller hysteresis with the presence of grain boundaries. In films with grain boundaries, the hysteresis is decreased by about 30% compared to single crystalline films. Nevertheless, a large grain boundary density leads to a broadened transition. To explain this behaviour, we discuss the influence of grain boundaries on the martensitic transformation. While grain boundaries act as nucleation sites, they also lead to different strains in the material, which gives rise to various transition temperatures inside one film. We can show that a thoughtful design of the grain boundary microstructure is an important step to optimize the hysteresis.