The tension properties, thermal expansion coefficient, microstructure and the causes of crack formation of the stainless steel layer in the composite pipe made by centrifugal-SHS process were investigated. It was shown that the tensile strength is 316 MPa and the percentage elongation is 5-8%. The nonmetal inclusions make the stainless steel brittle. In the brittle stainless steel layer the crack is caused by the thermal stress. The stainless steel mainly composed of austenite phase which grows in columnar grain in the radial direction of a carbon steel pipe and a thin ferrite layer was distributed between the austenite phases. The intermetallic compound AlNi precipitates in the ferrite phase and sigma-phase precipitates at the phase boundarie between the austenite and ferrite.