We have used in situ X-ray scattering and finite element modeling (FEM) to examine the micromechanics of deformation of in situ formed metallic-glass-matrix composites consisting of Ta-rich particles dispersed in an amorphous matrix. The strain measurements show that under uniaxial compression the second-phase particles yield at an applied stress of similar to 325 MPa. After yielding, the particles do not strain hardon significantly; we show that this is due to an increasingly hydrostatic stress state arising from the lateral constraint on deformation of the particles imposed by the elastic matrix. Shear band initiation in the matrix is not due to the difference in elastic properties between the matrix and the particles. Rather, the development of a plastic misfit strain causes stress concentrations around the particles, resulting in localized yielding of the matrix by shear band formation at an applied stress of similar to 1450 MPa, considerably lower than the macroscopic yield stress of the composite (similar to 1725 MPa). Shear bands do not propagate at the lower stress because the yield criterion of the matrix is only satisfied in the region immediately around the particles. At the higher stresses, the yield criterion is satisfied in large regions of the matrix, allowing extensive shear band propagation and significant macroscopic plastic deformation. However, the presence of the particles makes the stress state highly inhomogeneous, which may partially explain why fracture is suppressed in the composite, allowing the development of large plastic strains. (c) 2005 Acta Materialia, Inc. Published by Elsevier Ltd. All rights reserved.