Composites are finding lot of applications in aerospace, automobile and many other sectors due to their high strength to weight ratio and longer fatigue life. For assembly or electrical wiring purposes, often hole(s) are drilled into the laminate thereby reducing its strength. The strength prediction and damage mechanics study is of great importance in such structural applications. In this work, a three-dimensional finite element based progressive damage model (PDM) is presented for unidirectional carbon fiber reinforced polymer (CFRP) laminates having two holes in different configurations subjected to tensile loading. The developed model is suitable for predicting failure and post failure behavior of fiber reinforced composite materials. The material is assumed to behave as linear elastic until final failure. The three broad steps involved in this study are stress analysis, failure analysis and damage propagation which are implemented as a PDM involving finite element analysis. Hashin's failure criteria for unidirectional fiber composite is used for the damage prediction. It utilizes a set of appropriate degradation rules for modeling the damage involving material property degradation method. Digital image correlation (DIC) experiment is also carried out to perform whole field strain analysis of CFRP panel with different hole configurations. Whole field surface strain and displacement from finite element prediction are compared with DIC results for validation of the finite element model. Load-deflection behavior as well as path of damage progression is predicted by both PDM simulation and experiment. They are found to be in good agreement thereby confirming the accuracy of PDM implementation. Effect of spacing between the holes on stress concentration factor (SCF) is also further investigated. © The Author(s) 2013 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav.