The objective of this study is to provide detailed investigation of stiffness, strength, and failure mechanisms in ultra-short carbon fiber polymer composite materials. The reinforcement phase in traditional chopped fiber composites generally consists of glass fibers 10 urn in diameter with lengths on the order of 15 mm in length. Ultra-short carbon fiber composites with lengths of 3 mm and diameters of 3 to 8 urn show promise as a versatile inexpensive reinforcement, yet failure of morphologies which bridge particle-like and fibril behavior are not yet well explored. Furthermore, some level of microstructural design may be achieved by inducing uniform alignment in the ultra-short fiber arrays. In order to investigate progressive failure of various microgeometries, finite element based micromechanical approaches are utilized to perform virtual tests on highly detailed microstructural representations. Discrete damage and progressive failure are simulated using both micromechanical element deletion schemes and the Extended Finite Element Method (XFEM) for mesh-independent fracture and failure analysis. The XFEM method allows splitting of an element to represent discrete damage, while inserting a cohesive law to describe post-cracking behavior. Careful parametric analysis will elucidate the effects of various microstructural factors, including: fiber-matrix interface effects, fiber diameter, chopped fiber length, uniform fiber alignment/misalignment, fiber spacing, and the constituent properties of both fiber and matrix. Trends in microstructural effects on material performance will be carefully analyzed to provide guidance for processing targets to achieve desired properties in tailorable feedstock.