A three-dimensional finite element model of the carotid artery bifurcation was constructed in order to determine the stress field and assess the modification of the stress field when residual strain is taken into account. Residual strain in the carotid bifurcation was characterized by experimental observations. According to these observations, a geometrical model of the carotid artery was constructed to exhibit a state free of strain. Appropriate boundary conditions were applied to yield the correct geometry in the unloaded state, and physiological levels of pressure and axial stretching were applied. The model took into account the varying thickness of the arterial wall along the bifurcation. For modeling purposes, the material was considered to be hyperelastic, incompressible, homogenous and isotropic. For comparison, a similar model of the carotid artery which does not include the effects of residual strain was also created. The results demonstrate that in the model of the carotid artery bifurcation with residual strain, the distribution of maximum principal stress along the inner wall and the circumferential stress throughout the wall is much more uniform than in the model without residual strain. The ratio between the stress at the inner and the outer walls is highest at the lateral wall of the carotid sinus; this is the same location known to be a site of low and oscillatory fluid wall shear stress, and the principal location of early intimal thickening. These results suggest that the localization of atherosclerosis in the carotid artery may be due to local variations in both fluid wall shear stress and solid wall stress.