This paper introduces a nonlinear finite element analysis on damage propagation behavior of composite sandwich panels under in-plane uniaxial quasi-static compression after a low velocity impact. The major damage modes due to the impact, including the residual indentation on the impacted facesheet, the initially crushed core under the impacted area, and the delamination are incorporated into the model. A consequential core crushing mechanism is incorporated intothe analysis by using an element deactivation technique. Damage propagation behavior, which corresponds to those observed in sandwich compression after impact (SCAI) tests, has been successfully captured in the numerical simulation. The critical far field stress corresponding to the onset of damage propagation at specified critical locations near the damage zone are captured successfully. They show a good correlation with experimental data. These values can be used to effectively predict the residual compressive strength of low-velocity impact damaged composite sandwich panels.