In this paper, an equivalent three-phase micromechanical model of composite with an elasto- plastic matrix and shape memory alloy (SMA) reinforcement is developed. Compared with the traditional two-phase method, the interaction among the austenitic phase, the martensite phase and the matrix phase is considered. During applications of the model, the predicted curve shows good agreement with the experimental result. Most attention is given to the effect of fiber shape on the overall response of the composite and the residual stress. It is helpful to design an intelligent composite.