In this work, the approach for thermo-mechanical analysis of particulate composites having uniform, clustered and interpenetrating phase distribution of particles has been proposed. This study investigates the effects of convection cooling rate on the generated thermal residual stresses in metal matrix composites using a sequential coupled transient heat conduction analysis. FE simulations are conducted on 3D RVEs, and the predicted elastic modulus has been compared with the reported experimental values and also with the Mori–Tanaka and Double-inclusion models. In addition to the effective mechanical properties of composites, the thermal residual stresses are also computed by simulating the processing conditions of composites. We observed that for composites having high volume fraction of reinforcement and a high particle to matrix stiffness ratio (Ep/Em > 8), the Mori–Tanaka predictions are off the mark, while the double inclusion model shows good agreement with FE predictions. The interpenetration phase composites having 25% or more volume fraction result in enhanced effective properties. Our study reveals that the thermal residual stresses increase sharply as the molten metal changes its phase during transient cooling process. A high convection coefficient during composite cooling process results in substantially high thermal residual stresses.