Thermo-mechanical behaviors of polymer matrix composite(PMC) with continuous TiNi fiber are studied using theoretical analysis with 1-D analytical model and numerical analysis with 2-D multi-fiber finite element(FE) model. It is found that both compressive stress in matrix and tensile stress in TiNi fiber are the source of strengthening mechanisms and thermo-mechanical coupling. Thermal expansion of continuous TiNi fiber reinforced PMC has been compared with various mechanical behaviors as a function of fiber volume fraction, degree of pre-strain and modulus ratio between TiNi fiber and polymer matrix. Based on the concept of so-called shape memory composite(SMC) with a permanent shape memory effect, the critical modulus ratio is determined to obtain a smart composite with no or minimum thermal deformation. The critical modulus ratio should be a major factor for design and manufacturing of SMC.