A model was developed which assumes the spontaneous formation of an interphase around the inclusions in particulate filled composites. Elastic properties of the interphase change continuously from the surface of the particle to a matrix value far from it. Using first-order perturbation calculations an approximate analytical solution was given for the distribution of displacements and stresses around the inclusions. Fitting the model to experimental data has shown that an appropriate choice for the function and the parameters describing property changes around the inclusions makes possible the reliable prediction of composite properties. Using a simple averaging procedure, composition dependence of tensile yield stress was described; in accordance with experimental observations the model could predict composite yield stresses exceeding the matrix value and explain the effect of interfacial interactions. Comparison of the theoretical model with a previously developed semiempirical one indicates that the main factor determining yield stress is the relative load bearing capacity of the second component. Interacting stress fields compensate each other, decreasing local stress maxima; thus justifying the averaging procedure applied. Contradictions of the models are analysed and areas for further research are also indicated in the paper.