Abstract A general parametric study using nonlinear finite element analysis for the microindentation test for composite interfacial shear strength measurement was performed. The effects of material parameters such as matrix and interphase properties and interphase thickness on the interfacial shear stress distribution and load—displacement data were evaluated. The finite element results were compared to those of the shear lag analyses and an empirical derivation. It was found that the empirical derivation agrees reasonably well with the nonlinear finite element analysis when the fiber volume fraction is between 0.3 and 0.5. The shear lag analysis is accurate only when the fiber volume fraction is low. The interfacial shear stress is sensitive to local fiber volume fraction and interphase properties. Accurate interfacial shear strength can be obtained if a more stringent test procedure is adopted.