Functionally graded materials have composition gradients from one end to the other as the result of a gradual transition of the properties of different materials. The residual stress caused by the difference of coefficient of thermal expansion can be minimized using functionally graded material. Therefore, the gradient of the coefficient of thermal expansion should vary according to the compositional gradient. In this study, the coefficient of thermal expansion of each compositional layer of Ni-Al 2 O 3 functionally graded material was measured using a dilatometer. These measurements provided the material properties required to calculate the residual stress, using three-dimensional modeling for accurately predicting crack positions, since it is difficult to measure residual stress experimentally. The measurement results showed the gradual increase of the coefficient of thermal expansion from Al 2 O 3 -rich composition to Ni-rich composition. Finally, the results of calculating residual stresses using the measured coefficient of thermal expansion showed that the crack positions were predicted more accurately than those using the coefficient of thermal expansion calculated by the linear rule of mixtures. This was because the measured values include the effect of porosity of the composite, whereas the linear rule of mixtures cannot account for the porosity of each layer.