The effect of residual stress on the magnetoelectric properties of terfenol-D/PZT/terfenol-D laminates is studied. The sandwich structure composites with two longitudinally magnetized terfenol-D plates and one transversely polarized Pb(Zr0.52Ti0.48)O3 plate are manufactured under different uniform and constant magnetic fields. The magnetic plates will deform before adhesion. Therefore, residual stress is induced by the mismatched strain between laminates when the magnetic field disappears. The experimental results show that magnetoelectric coefficient is improved about 130% for sandwich structure composites with residual stress. It can be explained that the proposed method can improve the interface mechanical coupling effect. Therefore, the magnetic energy can be transferred effectively to electric energy through the mechanical deformation. At the same time the strain derivative de/dH is enhanced by residual stress. Thus, the electric polarization response is increased under a same disturbed magnetic field.