A mathematical model was developed to investigate the coupled transport and electrochemical reactions in a nickel-yttrial-stablizeci zirconia (Ni-YSZ) anode for use in solid oxide fuel cells (SOFCs). The modeling results were consistent with experimental data from the literature. Comparison between conventional non-graded (uniform random composites) and two types of functionally graded electrodes (FGE), namely particle size graded and porosity graded SOFC anodes were conducted to evaluate the potential of FGE for SOFC. Improved performance of both types of FGE was observed due to reduced mass transport resistance and increased volumetric reactive surface area close to the electrode-electrolyte interface. It was found that the particle size graded SOFC anode showed the best performance. This paper demonstrates that the SOFC performance could be enhanced by modifying the microstructures of the electrodes. The results presented in this paper provide a better understanding of the working mechanisms of SOFC electrodes and could serve as an important reference for design optimizations.