Three-dimensional micromechanics models were created for cross-ply carbon fiber/epoxy composite with a layer stacking-sequence arranged in $[0/90]_s$. Elasto-plastic finite element (FE) analysis was performed to study the effects of thermal residual stress and the stress redistribution as individual fiber fractures. The modified Rice and Tracey (RT) void growth model was used to predict the location of transverse matrix crack. The stress amplification factors (SAF) in intact fibers adjacent to a fractured fiber were calculated and compared with the planar array composite. The FE results show that small defects have already formed in curing process, and ply-delamination is likely to occur near the corner of free-edges. The transverse matrix crack was predicted to occur near the fiber fracture location in the models having little inter-fiber spacing.