The phase-field approach to dislocations is conceptually advanced. Large strain formulation is developed. A local thermodynamic potential eliminates stress dependence of the Burgers vector and reproduces the desired local stress-strain curve, as well as the desired, mesh-independent, dislocation height for any dislocation orientation. A gradient energy contains an additional term, which excludes localization of dislocation within a height smaller than the prescribed height but does not produce artificial interface energy and dislocation widening. Problems for nucleation and evolution of multiple dislocations along the single and multiple slip systems, and the interaction of dislocations with an austenite (A)-martensite (M) interface are studied using the finite element method. An unexpected scale effect in the athermal resistance to the A-M interface motion due to nucleated incoherency dislocations is revealed.