A composite system containing particles of Gd5Si2Ge2, which exhibit a colossal magnetic-field-induced strain, has been prepared. The composite is manufactured by embedding ball-milled Gd5Si2Ge2 particles with a size distribution of <600 mum in a resin matrix. The thermally induced volume strain in the composite resulting from phase transformation is found to be 1300 ppm. The magnetically induced linear strain resulting from phase transformation is also measured, from which the volume strain is deduced to be 1650 ppm. The volume strain from the composite is significantly lower than phase transformation strain of the bulk Gd5Si2Ge2 (8000 ppm) and is mainly attributed to nonalignment of the particles in the matrix. An analytical model for a 1-3 composite (particles aligned in a single direction in a polymer matrix) and a 0-3 composite (particles dispersed randomly in a polymer matrix) predicts significantly higher strains in a 1-3 composite. (C) 2004 American Institute of Physics.