The transformational behaviour of shape memory alloy (SMA) wires embedded into a fibre reinforced epoxy composite was investigated and is discussed in this article. The effects on the transformational temperatures, and heats of the embedded SMA wires and the generation of recovery stresses within the composites on heating are shown to be related to the reversible martensitic transformation of the SMA wires. This article details the effects of the constraining matrix on the transformations of self-accommodating and preferentially oriented martensite. It was found that there is little change in the transformation temperatures of the constrained SMA wires with increasing pre-strain, but that the measurable transformation heats decrease significantly with increasing pre-strain. It is concluded that the transformation of self-accommodating martensite is nearly not affected by the constrained matrix, whereas the transformation of the preferentially oriented martensite is suppressed. (C) 2002 Acta Materialia Inc. Published by Elsevier Science Ltd. All rights reserved.