The recent development of using negative stiffness inclusions to achieve extreme overall stiffness and mechanical damping of composite materials reveals a new avenue for constructing high performance materials. One of the negative stiffness sources can be obtained from phase transforming materials in the vicinity of their phase transition, as suggested by the Landau theory. To understand the underlying mechanism from a microscopic viewpoint, we theoretically analyze a 2D, nested triangular lattice cell with pre-chosen elements containing negative stiffness to demonstrate anomalies in overall stiffness and damping. Combining with current knowledge from continuum models, based on the composite theory, such as the Voigt, Reuss, and Hashin-Shtrikman model, we further explore the stability of the system with Lyapunov's indirect stability theorem. The evolution of the microstructure in terms of the discrete system is discussed. A potential application of the results presented here is to develop special thin films with unusual in-plane mechanical properties. (c) 2006 Elsevier B.V. All rights reserved.