The micromechanics of failure was developed to predict the failure of continuous fiber reinforced composites. A micromechanical approach using unit cells of square and hexagonal arrays was employed to compute the micro stresses of constituents and at the fiber—matrix interface, which were used to determine the failure initiation of a unidirectional ply. The constituent properties include two tensile and compressive strengths of fiber and matrix, plus normal and shear strengths at the interface. The matrix and interfacial dominated strength properties are determined by matching the micro stresses at the constituent levels with the observed transverse tensile and compressive strengths on the macro ply level. The longitudinal shear failure is then expected to be a result of damage progression after initial failure. Based on the current MMF, in the graphite/epoxy considered in this study both transverse tensile and compressive failure are expected to occur via matrix failure. However, in the glass/epoxy the transverse tensile and compressive failures are respectively caused by matrix failure and interfacial tensile failure. These predictions are compared with predictions from other widely used failure criteria as well as experimental data. Lastly, we predicted the failure of laminates. Instead of using a unidirectional ply-based failure theory, starting with the fiber, matrix, and their interface will lead to a much simpler, more generic theory.