The objective of this research is to explore the effect of microstructural defects on the mechanical properties of fiber reinforced composites. In particular, two kinds of defects are considered in the study, namely, matrix pores and interface precracks. Three-dimensional (3-D) finite element analyses are conducted on Representative Volume Elements (RVE) to predict the effective elastic properties of the transversely isotropic unidirectional composite with a random distribution of the pore defects and the results are reported. With regards to fracture properties, cohesive zone-based two-dimensional (2-D) finite elements are employed to simulate fracture in the microstructure, where the cohesive elements are embedded throughout the FE mesh to simulate arbitrary crack initiation and propagation. The results of the simulations are reported in terms of the fracture pattern and quantified using the effective stress-strain response for various volume and area fractions of matrix pores and interface cracks respectively. It is shown that the presence of defects has a noticeable influence on the elastic properties, but severely influences the fracture properties of the composite.@en