In this paper, combined the micromechanical and the thermodynamic theory, a three phase model for the SMA composite is developed, in which the composite is considered as the austenitic phase, the product phase (martensite) and the matrix phase. In the present model, the interaction among the three phases is analyzed. From the micromechanical analysis, the macroscopic free energy function is found. Then macroscopic transformation strain, effective elastic compliance, macroscopic constitutive model are derived.Compared with the traditional two-phase method, non-linearity of SMA need not be considered. The method is not only simply but also the interaction among the three phases is considered. As an application of above model, we consider the case of a composite with NiTi/epoxy, illustrate the predicted stress-strain response of it under isothermal loading and unloading conditions and analyses the effects of temperature and fiber volume on macroscopic mechanical property. By comparing with references, it is shown that the results are credible. It is helpful to design the intelligent composite.