Raman spectroscopy of high-modulus polyethylene (PE) fibres embedded in epoxy resin shows that the axial compressive residual stress is constant at 0.3 G Pa for curing conditions where the matrix shrinkage is larger than 0.2%. Optical microscopy shows that the fibre fails by forming kink bands at this strain. The local stress concentration around the kink bands then causes interfacial debonding. The axial strain in a fibre varied widely at the kink bands but no significant difference was found between the axial strain at a kink band and at a nearby position on the undamaged fibre. The PE fibres have a very small thermal coefficient of expansion (TCE) in the axial direction and an unusually large TCE in the radial direction, larger than that of the epoxy matrix. On cooling the composite after curing, a normal tensile stress develops at the interface between the fibre and epoxy, and in PE fibres without surface treatment this causes debonding of the interface. PE fibres with ammonia plasma surface treatment do not debond on cooling, but the interface is still weaker than that of other reinforcing fibre composites. One reason for this is the large radial TCE of these fibres. When the fibre is pulled through the matrix after interfacial debonding, the axial stress distribution shows that interfacial friction is established. The interfacial normal stress must change to a compressive stress during pull-out; the cross-section of the fibre is irregular. The normal stress and frictional coefficient can be obtained from the axial stress distribution. It is found that plasma-treated fibres have a much higher normal stress and frictional coefficient than untreated fibres. The load-displacement curves in single-fibre pull-out tests also show the differences in friction.