Interlaminar fracture in composite laminates may initiate either from a free edge, where a triaxial state of stress exists, or from an interior region, where intralaminar cracks may divert into the interlaminar layers. Experimental evidence has shown that while the free edge related interlaminar cracking is localized, the interior delamination may be distributed in a wider region. The individual cracks associated with the interior delamination are generally small, at least initially, in comparison to the structural dimensions. This paper treats the interior delamination using a damage mechanics approach where the damage is represented by internal state variables. A tensorial description of damage is adopted which leads to a single parameter characterization of the interlaminar cracking. A phenomenological theory of stress-strain response is then developed and relationship between the overall moduli and the severity of interlaminar cracking are derived.