Because of the inherent coefficient of thermal expansion (CTE) mismatch between the fiber and matrix within metal and intermetallic matrix composite systems, high residual stresses can develop under various thermal loading conditions. These conditions include cooling from the processing temperature to room temperature as well as subsequent thermal cycling. As a result of these stresses, within certain composite systems, radial, circumferential, and/or longitudinal cracks have been observed to form in the fiber-matrix interface region. A number of potential solutions for reducing this thermally induced residual stress field have been proposed recently. Examples of some potential solutions are high CTE fibers, fiber preheating, thermal anneal treatments, and engineered interfaces (e.g. a compensating/compliant layer concept or the graded layer concept). In the strict sense, an engineered interface is one that provides a compromise between the various pertinent chemistry and mechanics issues for the application and the system under consideration. Here, the focus is on designing an interface (using a compensating/compliant layer concept) to reduce or eliminate the thermal residual stress field and, therefore, the initiation and propagation of cracks developed during thermal loading. Furthermore, the impact of the engineered interface on the composite's mechanical response when subjected to isothermal mechanical load histories is examined.