Due to their high strength to weight and stiffness to weight ratio, there is a huge shift towards the composite materials from the conventional metals, but composites have poor damage resistance in the transverse direction. Undergoing impact loads, they can fail in wide variety of modes which severely reduces the structural integrity of the component. This paper deals with the homogenization of glass-fibers and epoxy composite with a material introduced as an inelastic inclusion. This nonlinearity is being modelled by kinematic hardening procedure and homogenization is done by one of the mean field homogenization technique known as Mori-Tanaka method. The homogenization process consider two phases, one is the matrix and another is the inelastic inclusion, thus glass-fibers and epoxy are two phases which can be considered as one phase and act as a matrix while homogenizing non-linear composite. Homogenization results have been compared to the matrix at volume fraction zero of the inelastic inclusions and to the inelastic material at volume fraction one. After homogenization, increase of the energy dissipation into the composite due to addition of inelastic material and effects onto the same by changing the properties of the matrix material have been discussed. © 2016 SPIE.