Functional graded materials are generally provided in discretely layered structures to reduce the abrupt mismatch and to improve failure performance. To investigate the thermal stress singularity occurring at the intersection of an interface and a free end, two-dimensional and three-dimensional finite element analyses are performed for titanium and aluminum layers with or without functional graded materials. The results indicate that once the functional graded material is added, the stress singularity around the intersection of an interface and a free end could be significantly relieved. If more FGM layers are used, the stress singularity could be further reduced to a very small value. If the longitudinal normal stresses and interlaminar shear stress are considered, two-dimensional finite element analysis may be enough, while three-dimensional analysis is necessary for the interlaminar normal stress. Otherwise, one may underestimate its stress singularity.