The behavior and evolution of stepped circular bi-laminates with edge damage under uniform thermal load are studied. The problem is treated as a moving intermediate boundaries problem in the calculus of variations. Varying boundaries are allowed for the evolving damage region from the smaller substructure's edge and the progressing/regressing sliding contact region adjacent to the intact composite structure. Transversality conditions define the locations of propagating boundaries for equilibrium configurations of the evolving composite structure, along with equilibrium equations and interior/exterior boundary conditions. The influence and progression of different contact configurations and detached segment behaviors on the overall composite structure evolution are evaluated. Closed-form analytical solutions for the geometrically non-linear problem yield expressions for the critical buckling load. The analytical solutions provide explicit forms of the total energy release rate along the delamination front and conditions for the propagation of the contact zone boundary. Numerical simulations unveil a rich evolution process, involving contact progression/recession, metamorphosis, buckling, and detachment progression during pre-buckling, sling-shot buckling, and post-buckling phases. These behaviors depend on material properties, sublaminates' geometry, initial damage size, and interfacial bond strength. The study explores the behavior of stepped circular bi-laminates with edge damage under thermal load, addressing their evolution, critical buckling loads, and characteristic damage propagation.