In this paper, a residual stress analysis and expansion of plastic zone in metal-matrix composite laminated plates with a circular hole are studied by using Finite Element Method. Aluminum metal-matrix and steel fibers are used to produce the composite plates by using mould. Mathematical formulation is given for the elastic-plastic stress analysis of a laminated plate under transverse loads for small deformation. The first-order shear deformation theory is used in this study. The expansion of plastic zone is illustrated for 300, 600 and 900 loading steps.