A multifunctional fiber‐reinforced composite with passive self‐sensing, energy‐harvesting, and damage detection capabilities is presented. Here, barium titanate piezoelectric microparticles are deposited on basalt fibers by a scalable, low‐cost, environmentally friendly continuous feed‐through process. The resulting composite derives a superior interlaminar shear strength from the microparticle‐modified fiber–matrix interfaces. The composite also demonstrates passive self‐sensing capabilities that produce electrical signals proportional to various dynamic loading events. Vibration and strain‐controlled experiments are performed on composite beams to quantify the sensitivity and power output as a function of input acceleration and strain. Furthermore, these composite‐generated electrical signals are used to identify in situ damage initiation for structural health monitoring to inform composite damage prior to structural failure. In brief, this truly multifunctional composite simultaneously displays a sensitivity of 0.5–2.6 mV g−1 at a resolution of 0.045–0.20g (g = gravitational acceleration), energy harvesting in the range of nW cc−1, and prediction of early damage by exhibiting 0.017–1.17 mV peaks in voltage–time history profiles while assuring ≈20% improved interlaminar shear strength.