The presence of defects or embedded sensors in a composite part could reduce the tensile properties of the composite. A cylindrical microwire temperature sensor tube is embedded into unidirectional and fabric weave laminates to study its effect on the tensile properties of the composite. The sensor tube is embedded at orientations 0⁰, 45⁰ and 90⁰ to the fiber direction. The fiber waviness resulting from embedding the sensor is quantified using a microscope. The reduction of the tensile properties of the composite that could be attributed to the eye shaped resin rich region and the fiber waviness is measured for the unitape and fabric laminates experimentally. A non-linear finite element model was assembled to understand the underlying mechanisms that produce strength reduction in the presence of an embedded sensor. The finite element model indicated failures initiating at the tip of the resin rich region well before elevated stress levels around the sensor led to total failure. The predictions of the model which included cure induced residual stresses, compared satisfactorily with the experimental data.