Three-dimensional spatially resolved strains were mapped in a model NiAl/Mo composite after nanoindentation. The depth-dependent strain distributed in the two phases and partitioned across the composite interfaces is directly measured at submicron length scale using X-ray microdiffraction and compared with a detailed micromechanical stress analysis. It is shown that indentation-induced deformation in the composite material is distinct from deformation expected in a single-phase material. This difference arises in part from residual thermal strains in both phases of the composite in the as-grown state. Interplay between residual thermal strains and external mechanical strain results in a complex distribution of dilatational strain in the Mo fibers and NiAl matrix and is distinct in different locations within the indented area. Reversal of the strain sign (e.g., alternating tensile/compressive/tensile strain distribution) is observed in the NiAl matrix. Bending of the Mo fibers during indentation creates relatively large ∼1.5° misorientations between the different fibers and NiAl matrix. Compressive strain along the 〈0 0 1〉 direction reached −0.017 in the Mo fibers and −0.007 in the NiAl matrix.