Shape memory alloys (SMAs) are a type of shape memory materials that recover large deformation and return to their primary shape by rising temperature. In the current research, the effect of embedding SMA wires on the macroscopic mechanical behavior of glass–epoxy composites is investigated through finite element simulations. A perfect interface between SMA wires and the host composite is assumed. Effects of various parameters such as SMA wires volume fraction, SMA wires pre-strain and temperature are investigated during loading–unloading and reloading steps by employing ANSYS software. In order to quantify the extent of induced compressive stress in the host composite and residual tensile stress in the SMA wires, a theoretical approach is presented. Finally, it was shown that smart structures fabricated using composite layers and pre-strained SMA wires exhibited overall stiffness reduction at both ambient and elevated temperatures which were increased by adding SMA volume fraction. Also, the induced compressive stress on the host composite was increased remarkably using 4% pre-strained SMA wires at elevated temperature. Results obtained by FE simulations were in good correlation with the rule of mixture predictions and available experimental data in the literature.