A three-dimensional penalty finite element formulation is proposed for the stress analysis of laminated composite structures. In this formulation, the stresses of interest are regarded as primary variables together with the displacements to be solved, thereby eliminating the need to numerically differentiate the displacements in order to obtain the stresses, as in the displacement-based finite element method. Two examples are presented, the first involving an interlaminar stress analysis of a double cantilever beam specimen, and the second involving the validation of the penalty formulation for bulk stress and stress intensity factor calculations. The results of both analyses indicate that the penalty formulation can be successfully used to calculate the desired stresses accurately.