A constitutive model that describes the mechanical behaviour of steels exhibiting “Transformation Induced Plasticity” (TRIP) during martensitic transformation is presented. Multiphase TRIP steels are considered as composite materials with a ferritic matrix containing bainite and retained austenite, which gradually transforms into martensite. The effective properties and overall behaviour of TRIP steels are determined by using homogenization techniques for non‐linear composites. The developed constitutive model considers the different hardening behaviour of the individual phases and estimates the apportionment of plastic strain and stress between the individual phases of the composite. A methodology for the numerical integration of the resulting elastoplastic constitutive equations in the context of the finite element method is developed and the constitutive model is implemented in a general‐purpose finite element program. The prediction of the model in uniaxial tension agrees well with the experimental data. The problem of necking of a bar in uniaxial tension is studied in detail.