The contribution of fibers to the strength of fiber-reinforced soils is very much dependent on the distribution of orientation of the fibers. The fibers in the direction of largest extension contribute most to the strength of the composite, whereas the fibers under compression have an adverse effect on the composite stiffness, and they do not produce an increase in the composite strength. Considering a contribution of a single fiber to the work dissipation during failure of the composite, and integrating this dissipation over all fibers in a composite element, a failure criterion is derived for fiber-reinforced sand with an anisotropic distribution of fiber orientation. A deformation-induced anisotropy was detected in experiments. Specimens with initially isotropic distribution of fiber orientation exhibited a kinematic hardening effect. The evolution of fiber orientation in the deformation process was found to have been the cause of the anisotropic hardening.