Fiber tow-gap is a composite defect that occurs during fiber deposition using Automated Fiber Placement technique. This defect resulting from the inherent gap between the adjacent fiber tows causes local thickness consolidation. It creates relatively large resin pockets that can affect the impact response and residual compressive strength of composite structures. Although the tow-gap effect on the in-plane response of composite laminates has been widely studied, there is still a lack of knowledge in damage assessment of defective composite plates subjected to Low-Velocity Impact (LVI) loading. In this study, a series of experimental Compression After Impact (CAI) tests are carried out on the standard carbon/epoxy composite plates subjected to impact loads to investigate the combined effect of impact damage and gap defect on the residual compressive strength reduction. Effect of the curing process on the gap formation is evaluated by measuring the Induced Gap Shrinkage Factor (IGSF) using microscopic observation. This factor is used for numerical simulation of the defective composite plates. Digital Image Correlation (DIC) technique is also used to measure the in-plane strains of the specimen under compressive loading. Furthermore, a numerical investigation is carried out by implementing the Induced Defect Layer Method (IDLM) model. The numerical studies contain both LVI and CAI results, including the impact response, impact damage, and final failure of impacted specimens under compressive loading. Results show that the induced gaps play a significant role in the residual strength reduction of thin composite plates, which is significant in low-velocity impact loading. It is also shown that IDLM is a robust meso-macro damage method for damage analysis of the composite laminates with manufacturing-induced gaps.