Functionally Graded Materials (FGMs) are composite materials that have continuous material variation along with geometry. This paper introduces a method for FEA-based design and layered manufacturing (LM) of FGMs. An FGM solid model is first created by referring to the libraries of primary materials and composition functions. The model is then discretized into an object model onto which appropriate material properties are mapped. Next, the object model is adaptively meshed and converted into an FE model. FEA using ANSYS is finally performed to estimate stress levels. This FEA-based design cycle is repeated until a satisfactory solution is obtained. The object model is then fed to the fabrication system where a process planning is performed to create instructions for LM machines. As a laser-based LM method, Direct Metal Deposition (DMD) at the University of Michigan is briefly described. A specific example (FGM pressure vessel) is shown to illustrate the entire FEA-based design and DMD fabrication cycle.