The mechanical performance of carbon fibre reinforced polymers is predominantly limited by internal stress induced by resin shrinkage of the polymer matrix. Terfenol-D particles are investigated as internal sensors to detect the stress situation on a non-destructive way. Part 1 of the article describes the preparation and characterization of the samples used in the investigation of the sensory effect (Kubicka et al. J Mater Sci 47:5752-5759, 2012). Part 2 presents the results of the evaluation of the stress detection. A fundamental discussion is given how these magnetostrictive particles act as stress sensors in epoxy resins using the Villari effect. Analysing this effect in terms of particle content, particle size and particle distribution the most promising parameters are identified. Obviously the higher the particle content (20 wt%) and the smaller the particle size (< 20 mu m) combined with a strong homogeneous particle distribution the higher the magnetic flux density changes, in case of tensile loads. These corresponding stress situations are quantified by a Hall probe. Interestingly, the magnetic flux density changes (a dagger B) can be significantly increased by a pre-magnetization step of the samples, allowing a more sensitive detection of the Villari effect.