Theoretical fundamentals for a 2D layer-wise laminate theory including the transverse shear and transverse normal strains are presented which provide a compromise between the continuum theory and the single-layer laminate theories. Four-node isoparametric assumed strain layer-wise shell elements are developed which can be applied to interlaminar stress analysis of composite laminates and simulation of stress singularities due to concentrated loading, free-edge effects, etc. Numerical examples are given to demonstrate the ability and accuracy of the numerical models proposed.