The current study presents a micromechanical methodology to analyze the cracking behavior of a SiC/SiC composite with multilayer interphase using finite element method. To capture the constituent level damage initiation and propagation within the multilayer interphase, an axisymmetric unit-cell model was developed by discreetly modeling the fiber, the matrix, and the sublayers of interphase. Moreover, the cracking inside the interphase and debonding at the interfaces between different constituents were taken into account. The extended finite element method (XFEM) was applied to model the cracking inside the interphase and matrix. The cohesive surface approach was employed to describe the debonding behavior at all the interfaces. Adopting the proposed numerical approach, detailed local stress state and cracking behavior of SiC/SiC composites with multilayer interphase were analyzed. The results show that the multilayer interphase has a significant effect on the cracking behavior. Moreover, the growth length of secondary cracks had been demonstrated to be a useful parameter that is capable of connecting composites level behaviors and constituent level damages. From the various numerical methods used, the finite element simulation in conjunction with the XFEM and the cohesive surface approach is a precise and consistent way to analyze the crack propagation and prediction of failure for composites with multilayer interphase. The research provides a fundamental method for promoting the interphase design of SiC/SiC composites.