Abstract: Micro strain and stress field and the average field is significantly influenced by the interaction of inclusions of high volume fraction, and the composite mechanical properties changes a lot by the introduced inclusions. To reduce the error of using the theoretical model with single inclusion in real multi-inclusion-material property prediction, an inclusion interface cracking model is established based on the interaction direct derivative (IDD) estimate. Average e ective stress field is obtained under applied loading and residual stress based on the IDD estimate, then the stress intensity factor (SIF) of interface arc-crack around circular inclusion under the stress boundary condition is calculated. The critical applied stress is evaluated according to the e ective stress field and the interface arc-crack SIF, and the influence of inclusion elastic modulus, volume fraction, residual stress, and inclusion size are analysed. The result indicates that the method is e ective. Residual stress has remarkable influence to interface cracking; the critical applied stress is not monotonic and complicated with the inclusion sti ness variation when the residual stress is large, while the critical applied stress is increasing with the soft inclusion decreasing the sti ness and the sti inclusion increasing the sti ness when the residual stress is small; large size inclusion decreases the critical applied stress and detrimental to composite strength.