The influence of embedding a titanium alloy sensor tube in carbon fiber-reinforced polymer (CFRP) composite laminates on the in-plane compressive strength has been presented. These sensor tubes cause geometric disturbances in fiber architecture and lead to formation of resin pockets which are considered as defects and were characterized with help of an optical microscope. These Micro-Wire Sensor (MWS) cylindrical tubes were embedded at 0° and 90° orientations with respect to the fiber direction and their impact on the compressive strength was studied experimentally and numerically for three different stacking sequences and two different material systems. Digital Image Correlation (DIC) was employed for strain mapping around the sensor region and to capture the onset of failure. It was observed that inclusion of tube in fabric did not impact the in-plane compressive modulus and strength due to inherent undulation in the material. However, a reduction of 5.31% in compressive strength was observed for a cross-ply laminate manufactured using unidirectional tape. Finite element analysis was used to evaluate stress concentrations present due to sensor and to investigate the stresses at the interface of resin pocket and composite. Progressive failure analysis was also performed using maximum strain criterion to understand damage evolution and correlate results to experimental testing. The failure modes captured were similar to the experiments and ultimate failure strength was predicted to an accuracy of ±5%.