Understanding the stress concentrations that develop due to fiber failure in multi-fiber composites is crucial because it dictates the failure mode and toughness of a composite. Composites with strong fiber/fiber interaction (high stress concentrations) are often brittle while those with low fiber/fiber interaction are more ductile. In this study, the effect of fiber failure on neighboring fibers in graphite/epoxy composites was studied using Micro Raman Spectroscopy (MRS). The effect of interphase toughness and strength on the stress concentration factor (SCF) and the radius of the zone of influence, r∞ was studied. It was found that the toughness of the interphase strongly affects SCF and r∞ A brittle interphase was found to reduce r∞ from 30 fiber diameters to 20 and caused SCF to drop more rapidly with inter-fiber distance. The maximum value of SCF was not affected by the toughness of the interphase and was found to be 1.46 ± 0.05. On the other hand, a 50% decrease in the interfacial shear stress (from 40 MPa to 20 MPa) resulted in a further reduction in r∞ down to 10 fiber diameters and a reduction in the maximum SCF to 1.16 ± 0.05. The results are explained and discussed from both micromechanics and energy viewpoints.