AbstractAn approach using strain energy‐like potentials to characterize deformation and fracture of inelastic, nonlinear composite materials is described. The inelasticity may be due to various causes, including microcracking, microslipping, and rate processes responsible for fading memory (viscoelasticity). The concept of work potentials is introduced first, and then arguments are given for their existence for inelastic materials. Emphasis in the paper is on elastic composite materials with changing or constant states of distributed damage. Experimental results on polymeric composites are subsequently presented to illustrate this approach to deformation and fracture characterization. Finally, extension to viscoelastic behavior is discusse