Finite element analyses were performed in order to evaluate the residual stresses developed during fabrication process of the Nextel 440/Al-6061 composite. The Nextel 440 fiber has a square section with two half circle attached to the opposite sides geometry. The purpose of the analyses was to find out the effect of fiber orientation and fiber spacing on the thermal residual stresses in the composite after the composite was cooled down to room temperature. It was found that high compressive stresses developed between two fibers and the absolute value of the compressive stresses increased as the two fibers approached each other. However, significant tensile stresses developed between fibers once the two fibers touched each other. The transition from compression to tension could be explained by considering the force balance between contacting fibers. It seems that the residual stresses around fibers are not significantly affected by the boundary conditions of the unit cell models. But the effect of the fibers on the thermal residual stresses of the matrix is seen all over the matrix material. The normal stresses on the fiber/matrix interface is higher when the two fibers are orientated at 45 degrees to each other, than those when the two fibers are orientated at zero degree to each other. The normal stress at the fiber/matrix interface for this fiber geometry was higher compared to that would have developed if round fibers were used.