Prestressed concrete cylinder pipe (PCCP) has been widely used for water transfer and transit projects. However, prestressing wire breaks may result in the rupture of pipes and cause catastrophes. Carbon fiber reinforced polymer (CFRP) liners adhered to the inner concrete core can provide an effective method of internal repair and strengthening of PCCP. To evaluate the rehabilitation effect of CFRP-lined PCCP under combined loads, two contrasting three-dimensional finite element models that investigated the visual cracking of concrete and the yielding of steel cylinders were developed. A conceptual zone was introduced to analyze the different states of the pipe during the phase of wire break. In particular, the complex CFRP-concrete bonded interface was simulated by a cohesive element layer with a bilinear traction-separation response. The results show that CFRP has a good rehabilitation effect on the inner concrete core and steel cylinder but only a slight effect on the outer concrete core, prestressing wire, or mortar. A one-hoop CFRP layer diminishes the area of a yielding steel cylinder of 4.72 m2. In addition, CFRP works more effectively along with an increase in the number of broken wires. This research can provide a basis for strengthening distressed PCCP pipelines.