The martensitic transformation in pure Fe and its alloys has been studied over many decades. Several theoretical models have been proposed to describe the atomic motion that leads to the fcc-to-bcc martensitic transformation. However, such models do not account for the effect of pre-existing planar defects such as twin boundaries and stacking faults, present in the high-temperature austenite phase prior to the transformation process. This work systematically studies the role of nano-spaced planar faults with different inter-spacing on the martensitic transformation using molecular dynamics simulations. Research shows that the investigated planar defects affect the nucleation and growth mechanisms during martensite formation, the morphology of the resulting microstructure, the specific atomic path leading to the phase transformation, and the martensite start temperatures. Martensite variants were identified by the analysis of the atomic shears and slip systems during the transformation process. A crystallographic analysis is done to explain the existence of different shear mechanisms of martensite transformation at different locations in the fcc austenite. The present investigation provides fundamental insights into the martensitic transformation process in presence of pre-existing planar defects and can be applied to other material systems, e.g., Fe alloys.