This study investigates the impact of Al2O3 particle volume fraction and distribution on the deformation and damage of particle reinforced metal matrix composites, particularly in the context of functionally graded metal matrix composites. In this study, a two dimensional nonlinear random microstructure based finite element modeling approach implemented in ABAQUS/Explicit with a Python generated script to analyze the deformation and damage mechanisms in AA6061-T6/Al2O3 composites. The plastic deformation and ductile cracking of the matrix are captured using the Gurson– Tvergaard–Needleman model, whereas particle fracture is modelled using the Johnson–Holmquist II model. Matrix particle interface decohesion is simulated using the surface based cohesive zone method. The findings reveal that functionally graded metal matrix composites exhibit higher hardness values (HRB) than traditional metal matrix composites. The results highlight the importance of functionally graded metal matrix composites. Functionally graded metal matrix composites with a Gaussian distribution and a particle volume fraction of 10% achieveHRB values comparable to particle reinforced metal matrix composites with a particle volume fraction of 20%, with only a 2% difference inHRB. Thus,HRB can be improved significantly by employing a low particle volume fraction and incorporating a Gaussian distribution across the material thickness. Furthermore, functionally graded metal matrix composites with a Gaussian distribution exhibit higherHRB values and better agreement with experimental distribution functions when compared to those with a power law distribution.