Tensile residual stress happen by difference of coefficients of thermal expansion between fiber and matrix is one of the serious problems in metal matrix composite (MMC). TiNi alloy fiber was used to solve the problem of the tensile residual stress as the reinforced material. TiNi alloy fiber improves the tensile strength of composite by occurring compressive residual stress using shape memory effect in the matrix. A hot press method was used to create the optimal condition for the fabrication of shape memory alloy (SMA) composite. The bonding effect between the matrix and the reinforcement within the SMA composite was strengthened by the cold rolling. The fabricated composite by these processes can be applied as a part of the aircraft, and this part is operated under severe flying condition such as low temperature and high pressure. In this study, an acoustic emission technique was used to quantify the microscopic damage behavior of cold rolled TiNi/Al6061 SMA composite at low temperature condition. The results showed that the tensile strength of the TiNi/Al6061 SMA composite increased with the TiNi reinforcement at low temperature condition, but the strength for the specimen subjected to the cold rolling decreased. AE parameters of AE counts, amplitude and energy were useful to evaluate the microscopic damage behavior of the composite.