Diamond gradually-dispersed material is fabricated by the SHS (Self-propagating High-temperature Synthesis) method as a heat-resistant material. In a system of two layers composed of diamond dispersed and matrix layers, however, high residual stress must be generated in the interface. Therefore, gradually-dispersion of diamond in the matrix reaction is required to reduce the residual stress. In this study, the finite element method has been developed to evaluate macroscopic and microscopic stresses for the design of the diamond gradually-dispersed materials. The developed program for macroscopic analysis can treat an axi-symmetric specimens, allowing two dimensional models. The example model system composed Diamond/(TiB2/Si) and TiB2/Si layer. In this simulation, thermal residual stress, considering only elastic behavior, was calculated. The residual stress is relaxed in a three layers system compared with the two layers system. In the three layers system, an effect of the number of laminas in the middle layer (division of the middle layer) on the residual stress between the matrix layer and the neighbor layer with least diamond concentration was evaluated. The division of middle layer tend to reduce the residual stress effectively up to about ten laminas in the middle layer, but there was almost no farther effect with more than about ten laminas. We also have been developed an image mesh generation system to make the mesh model of microscopic structure, and carried out a microscopic analysis for diamond dispersed material by using the homogenization method. It is recognized that the developed system is able to apply to evaluate the stress of microscopic structure for particle dispersed materials. © 1999 Trans Tech Publications.