A thermodynamically consistent, novel multiphase phase field approach for stress- and temperature-induced martensitic phase transformations at finite strains and with interfacial stresses has been developed. The model considers a single order parameter to describe the austenite↔martensitic transformations, and another N order parameters describing N variants and constrained to a plane in an N-dimensional order parameter space. In the free energy model coexistence of three or more phases at a single material point (multiphase junction), and deviation of each variant-variant transformation path from a straight line have been penalized. Some shortcomings of the existing models are resolved. Three different kinematic models (KMs) for the transformation deformation gradient tensors are assumed: (i) In KM-I the transformation deformation gradient tensor is a is a linear function of the Bain tensors for the variants. (ii) In KM-II the natural logarithms of the transformation deformation gradient is taken as a linear combination of the natural logarithm of the Bain tensors multiplied with the interpolation functions. (iii) In KM-III it is derived using the twinning equation from the crystallographic theory. The instability criteria for all the phase transformations have been derived for all the kinematic models, and their comparative study is presented. A large strain finite element procedure has been developed and used for studying the evolution of some complex microstructures in nanoscale samples under various loading conditions. Also, the stresses within variant-variant boundaries, the sample size effect, effect of penalizing the triple junctions, and twinned microstructures have been studied. The present approach can be extended for studying grain growth, solidifications, para↔ferro electric transformations, and diffusive phase transformations.