Composite materials have been widely used in architecture, medicine, aerospace and other fields because of their excellent properties, however, the damage monitoring of composite materials has always been one of the difficult problems concerned by experts and scholars at home and abroad. In this paper, shape memory alloy (SMA) was embedded in the composite, and the strain transfer effect of the interface layer was considered. Using the resistance sensing characteristics of SMA, a plastic damage monitoring model of SMA composite based on strain transfer was established, which realizes the real-time monitoring of plastic damage strain of composite materials. Based on the monitoring model, the effects of different material parameters on the average strain transfer rate between SMA and composite were discussed, and the damage monitoring behaviors of SMA under different initial states and temperature conditions were discussed. The results show that decreasing the thickness of the interface layer, increasing the shear modulus of the interface layer and increasing the embedded length of SMA all increase the average strain transfer rate of the interface. The change of SMA resistance and the plastic damage strain of the composite are piecewise linear. This study can provide a theoretical basis for further optimization design and application of SMA composite damage monitoring.