Embedding fiber optic sensor (FOS) in fiber reinforced composites caused resin pockets and geometric disturbance of the reinforcing fibers around the optical fiber. The disturbance angle varied from 6.2 to 8.2 and the resin pocket area varied from 7 to 10 times the cross-sectional area of the sensor. These two act like defects and cause premature failure initiation. Failure initiation was hypothesized as due to transverse stress concentration. A static experimental study was conducted to evaluate the effect of an embedded optical fiber in unidirectional composite laminates. Inclination of FOS with respect to reinforcing fiber (loading direction) varied from 0 to 90 and the laminate thickness varied from 8 to 20 plies. The embedment had practically no loss of tensile modulus and about 10% loss of tensile strength while compression strength reduction was as large as 40%.