The effect of the matrix material on the magnetostriction of composites containing highly magnetostrictive particles has been studied. Experimental results showed that the elastic modulus of the matrix is an important factor determining the bulk magnetostriction of the composite. For a series of composites with the same volume fraction of magnetostrictive particles but different matrix materials, the bulk magnetostriction was found to increase systematically with decreasing elastic modulus of the matrix. A model theory for the magnetostriction of such composites has been developed, based on two limiting assumptions: uniform strain or uniform stress inside the composite. The theory was then used to predict the magnetostriction of the entire material from the volume fractions of the components, their elastic moduli and magnetostrictions. These predictions were in agreement with the experimental results. It is concluded that to obtain a high magnetostriction and adequate mechanical properties of a composite, the elastic moduli of the magnetostrictive phase and the matrix should be as close as possible in value. © 1999 American Institute of Physics.