Fiber/matrix debonding behavior of steel fiber composites is analyzed using a parametric finite element modeling procedure and compared with conventional composites with carbon and glass fibers. Cohesive surfaces are applied to fiber-matrix interface to simulate the debonding behavior, while the interface strength properties of steel fiber are obtained with and without surface treatment. The effect of various parameters on the debonding behavior is investigated, including stress concentrations, fiber diameter, fiber shape, and fiber volume fraction, using the parametric model. The influence of stress concentrations is determined to be much lower than the debonding strength. Debonding damage is more evident in larger fibers compared to smaller ones. Earlier and sudden interface separation is observed with the polygonal steel fibers compared to the circular ones. Increase in the fiber volume ratio increases the debonding opening distance but does not affect the opening angle significantly. The results can be useful for assessing possibilities to use steel fibers to increase toughness of the composites in comparison with glass and carbon reinforcement.