Application of digital image correlation technique for full field strain characterization has gained widespread interest. However, characterization of the strain and damage at very small length scales using this technique is still difficult and development in this regard would add a great value in understanding the material behavior, particularly for in-homogeneous materials such as composites. This article describes the work done primarily on continuous fiber reinforced polymer composites and ceramic matrix composites, towards applying the digital image correlation (DIC) technique at very small length scale, of the order of 100–200 μm. A novel technique was developed to generate a fine and randomly distributed speckle pattern. Actual examples of the application of digital image correlation at small length scales for strain and damage characterization are briefly described such as ply level strain measurement near ply drop in a fiber reinforced composite, local carbon-glass fiber joint strain measurement in hybrid composites, and short beam shear strength validation using ply level strain measurement in carbon glass fiber joints in hybrid composites. Limitations of digital image correlation technique for small scale strain measurement are also discussed.