This paper describes the development of a micromechanical-based constitutive model accounting for the effect of internal expansion on the residual elasticity of a Hashin composite material. This material is made of spherical inclusions that are subjected to gradual swelling within a quasi-brittle matrix. The main focus of this work is to describe and analyze the material mechanical response, with an additional focus on the internal swelling’s effect on the stress–strain response and residual elasticity. Microstructural features and parameters of major importance for the mechanical responses were identified. The innovative characteristics of the proposed approach are summarized as follows: (1) a full determination of the physics of a complete-damage problem throughout the whole process of inclusion swelling with upscaling techniques, which transfers the microcrack-related properties from the lower scale to upper scale; and (2) an evolution of the mechanical fields and the corresponding residual elasticity for various inclusion swelling levels. Concerning the matrix–inclusion composite, it was hypothesized that only the matrix was susceptible to cracking, with varied degrees of damage, whereas the inclusions behave elastically and the elastic modulus of the expanding inclusions remains constant. It is to emphasize that the gradual swelling of inclusions is modeled by an increasing strain in the current micromechanical-based constitutive model, and the microcracks are represented by a set of randomly oriented penny-shaped microcracks with identical radii (namely, closed cracks). The main contribution of the current research is to establish the exact mathematical solutions for the mechanical fields (stress, strain) caused by the swelling of the inclusions (mechanical loading) and derive the effective residual elasticity of a composite (structural response) subject to internal expansion and quasi-brittle damage. Based on the assumption of closed cracks that could be extended to open cracks in the upcoming work, the results proposed by the present paper help to understand the non-linear mechanical behavior of quasi-brittle materials subject to microcracking and provide a theoretical framework to be used as academical benchmark for numerical simulations.