In this paper experimental and FEA methods were used to study the damage propagation and failure properties of stiffened composite panels with discrete-source damage. The influence of discrete-source damage on residual strength of the composite panel was also investigated. The research results indicated that notched composite panel was suitable to simulate the damage property of stiffened composite panel with discrete-source damage. It has showed that there is high strain concentration at the notch end. And break-through of the stringer can make the load path changed. Based on different failure criteria, FEA method with progressive failure procedure was used to simulate the damage progression and failure procedure of the notched stiffened composite panel effectively. The analytical result was in good correspondence with the experimental data.