TRIP-matrix composites consist of austenitic steel and a partially stabilized zirconia, which yields a composite that can undergo a martensitic phase transformation in both components. Numerical analysis of the deformation and transformation behavior of such a composite is carried out by means of unit cell studies. The micromechanical simulations are conducted to separate and evaluate the two reinforcing mechanisms, namely the particle strengthening effect and the transformation effect in the partially stabilized zirconia. It is found that the phase transformation proceeds in a heterogeneous manner both in the matrix and the inclusion. The degree of inhomogeneity of transformation inside the inclusion is controlled by the interface strength.