A micromechanics method based on the Mori-Tanaka averaging scheme is used to predict the effective thermomechanical properties of composite materials reinforced by Shape Memory Alloy (SMA) fibers. Both elastic stiffness changes and transformation strains are taken into account in the constitutive modelling of the SMA fibers. Isothermal longitudinal and transverse stress input and stress-free thermal loading are imposed on the composite, and the composite transformation stress, the maximum transformation strain, and the hysteresis are computed. In con trast to a monolithic SMA, stress-free thermal loading of a shape memory composite is shown to produce transformation strains due to thermal stress induced phase transformation. Closed form solutions for the effective martensite and austenite start temperatures indicate that these temperatures are higher than those of the monolithic SMA material and they depend on the composite processing temperature.