Abstract: An interphase plays a key role in composites performance, its mechanical properties vary spatially due to diffusion and chemical reaction, but most actual models assume uniform material property in the interphase region. It is assumed that the material property of an interphase follows a power law function. The coated fiber and particle with such interphase in an infinite matrix under hydrostatic and pure shear loading have been analyzed respectively; the local stresses and the average stresses in the fiber or particle and the interphase are obtained analytically. With the help of the mean field concept in micromechanics, the effective moduli of the composite with such coated fibers or particles are derived as a function of the microstructure. The computed results show that the presence of an interphase can have an important influence on the effective property and local stress distribution of the composites.