Dislocation dynamics simulations were carried out to study the cyclic stress-strain response of crystals containing misfit particles. The strength differential, manifested by the difference in the magnitudes of tensile and compressive flow strength during continuous loading, is examined. The computational model consists of a spherical particle and a single Frank-Read source in a specified slip plane inside a face-centered-cubic crystal. Attention is devoted to the dislocation glide behavior affected by the misfit elastic field, even when the slip plane does not intersect the particle. The multiplication of dislocation from the single source, the formation of pile-up loops as well as the unraveling of the loops upon reversed loading were all captured by the simulation. It was observed that the existence of a misfit particle gives rise to strength differential, a phenomenon of fundamentally different nature with regard to the widely recognized Bauschinger effect. The "back stress" concept was employed to analyze the simulation result. The effects of particle size and applied strain rate on the overall strength differential were also examined. (C) 2004 Kluwer Academic Publishers.