<abstract> <p>The localized method of fundamental solutions belongs to the family of meshless collocation methods and now has been successfully tried for many kinds of engineering problems. In the method, the whole computational domain is divided into a set of overlapping local subdomains where the classical method of fundamental solutions and the moving least square method are applied. The method produces sparse and banded stiffness matrix which makes it possible to perform large-scale simulations on a desktop computer. In this paper, we document the first attempt to apply the method for the stress analysis of two-dimensional elastic bi-materials. The multi-domain technique is employed to handle the non-homogeneity of the bi-materials. Along the interface of the bi-material, the displacement continuity and traction equilibrium conditions are applied. Several representative numerical examples are presented and discussed to illustrate the accuracy and efficiency of the present approach.</p> </abstract>