Evolution of distributed damage in heterogeneous solids is modeled using the Transformation Field Analysis method [Proc. R. Soc. Lond. A (1992) 437, 311–327] and selected models of interface debonding in fibrous or particulate composites, as described in detail in the forthcoming paper [J. Mech. Phys. Solids Boehler Memorial Volume, 2001]. In this approach, stress changes caused by local debonding under increasing overall loads are represented by residual stresses generated by damage-equivalent eigenstrains that act together with the applied mechanical loading program and physically based local transformation strains on an undamaged elastic aggregate. Damage rates are derived from a prescribed probability distribution of interface strength and local energy released by debonding. Numerical simulations of damage evolution in a glass/elastomer composite indicate which of these two conditions controls the process at different reinforcement densities and overall stress states. In general, the energy released by a single particle at given overall stress decreases with increasing reinforcement density, and in proportion to particle size. Therefore, dense reinforcement by smaller-diameter particles or fibers should enhance damage resistance of composite systems.