Several important issues regarding damage simulation of composite laminates due to low velocity impact were investigated including contact law, damage initiation and the corresponding change of stiffness, and damping. Continuum damage mechanics was applied to account for the change of mechanical properties of damaged materials. The Hertzian contact law was modified in order to accommodate the serious damage in the plate. A semi-empirical delamination damage criterion was introduced. A finite element program was written in FORTRAN using twenty-noded solid elements with layered structure to analyze the transient dynamic response of composite laminates. In the simulation computations, variable material damping coefficients were applied to the elements according to damage in order to stabilize the computation. Damage in the forms of matrix cracking, delamination, and fiber breakage were included and analyzed. Results including the force history and delamination areas were found to correlate well with the experiments.