Gradual damage development in carbon fibre-reinforced polymers (CFRP) and its effect on the mechanical properties have been important subjects of investigation for many years. Most authors have studied transverse matrix cracking in cross-ply lay-ups and used the longitudinal Young's modulus as an indicator of the extent of damage development. Reductions of typically only a few percent have been found at saturation crack spacing. Some authors have studied the effect of matrix cracking on Poisson's ratio. The results show large reductions, but few data are available on the evolution of Poisson's ratio throughout the process of gradual matrix cracking and on the influence of the 0 degrees/90 degrees ply thickness ratio. Moreover, none of the available models seems to accurately predict the quantitative evolution of Poisson's ratio. In this work the degradation of the longitudinal and the transverse properties of a number of cross-ply CFRP laminates due to transverse matrix cracking under longitudinal tension was studied. The longitudinal Young's modulus appeared to be less sensitive to damage development, in contrast to Poisson's ratio which exhibited significant reductions in all lay-ups. A micromechanical model, based on the shear lag theory, was developed to predict the evolution of Poisson's ratio and the effect of the 0 degrees/90 degrees ply thickness ratio. The correlation between experiment and theory was very satisfactory.