TiNi alloy fiber was used to solve the problem of the tensile residual stress as the reinforced material. TiNi alloy fiber improves the tensile strength of composite by occurring compressive residual stress in the matrix using shape memory effect. In order to generate compressive residual stress in TiNi/Al6061 shape memory alloy(SMA) composite, 1, 3 and 5% pre-strains were applied to the composite in advance. It was also evaluated the effect of compressive residual stress corresponding to the pre-strain variation and the volume fraction of TiNi alloy. AE technique was used to clarify the microscopic damage behavior at high temperature and the effect of pre-strain in TiNi/Al6061 SMA composite. The results of the microscopic damage evaluation of TiNi/Al6061 SMA composite under various pre-strain using AE technique can be divided into three stage corresponding to the AE signals. AE counts and events were useful parameters to evaluate the fracture mechanism according to the variation of pre-strain. In addition, two dimensional AE source location technique was applied for monitoring the crack initiation and propagation in composite.