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As parts of different engineering structures, the functioning and behaviour of composite materials, particularly metal matrix composites (MMCs), are highly influenced by residual stresses (RS). The presence of tensile RS in the matrix accelerates onset of yielding, while compressive RS at the interface of the fibre and matrix postpones damage of the interface in transverse loading of composites. This chapter presents an overview of various aspects related to RS within the MMCs. In particular, interaction of RS and other factors to determine global behaviour of MMCs are presented. Failure characteristics, initial yield and collapse behaviour for different bi-axial loading in the presence of RS are also presented. Furthermore, effects of RS on high temperature behaviour of MMCs and a brief note on possible future research are presented.