Microstructure formation and stress evolution in a microstructure is simulated based on coupling equations for the phase, temperature and stress/strain. Grain growth processes from some nuclei of the precipitated phase are simulated under three different conditions. Assuming volumetric dilatation in the transformation to the precipitated phase, tensile and compressive stresses are generated in the interfacial region, and the distribution changes as the grain grows. The elasto-plastic model gives a residual stress distribution in the material, which is not able to be obtained using the elastic calculation. A grain-growth model with four regularly placed nuclei demonstrates creation of residual stress zones along the grain boundaries. Another model with randomly distributed nuclei also gives a residual stress distribution along the grain boundaries, in which dependence of the stress on the size and shape are observed.