The application of TRISO-based dispersion fuel to advanced light water reactors, small modular reactors and micro-reactors has attracted increasing attention globally. With combination of superior fission products retention capability of tri-structural isotropic (TRISO) particle and stability of zircaloy matrix, metal matrix microencapsulated (M3) fuel becomes a promising candidate. To guarantee the safety and obtain the maximal fissile loading, it is necessary to predict inpile thermo-mechanical coupling behavior of M3 fuel. In this study, a three-dimensional finite element analysis for thermo-mechanical coupling behavior of M3 fuel at light water reactors (LWRs) operation condition is performed based on ABAQUS platform. Irradiation effects are considered comprehensively, especially kernel-buffer-IPyC interaction is depicted based on the newly developed model. The actual irradiation boundary conditions in light water reactors are adopted based on existing studies. Distribution and evolution of temperature, displacement and stress-strain are obtained and analyzed. Numerical simulation shows that (1) irradiation-induced swelling of fuel kernel can be well accommodated by porous buffer layer and the particle volume increases only 0.039% at 19% FIMA; (2) the maximal first principal stress for the coating layers will not exceed the corresponding fracture strengths, so that the safety of TRISO particle and zircaloy matrix can be guaranteed. This study serves as a basis for advanced fabrication of M3 fuel in the future.