The strength and reliability of a 3-D unidirectional fiber-reinforced composite containing an initial defect in the form of a cluster of initial fiber breaks are studied analytically and by simulation. The simulation model uses a Monte Carlo technique based on 3-D lattice Green's functions to calculate the stress field, damage evolution, and faiure in composites under ''Local Load Sharing'' (LLS) conditions in which the stress from broken fibers is transferred predominantly to the nearby unbroken fibers. Failure of ''notched'' composites, after the matrix has reached its fully cracked/yielded stare, is observed to occur by local accumulation of a critical amount of fiber damage around the notch. The decrease in tensile strength, but increasing reliability, with increasing size of the initial cluster of broken fibers is characterized. An analytic model for strength and reliability is developed which follows from the strength and reliability of un-notched composites by including, in a surprisingly simple manner, the effects of the stress concentration factor owing to the notch and the fiber pull-out stress around the notch. The model captures all of the details of the simulation results and includes the important effects of composite volume. (C) 1997 Acta Metallurgica Inc.