The nonuniform distribution of dislocations in metals gives rise to material anisotropy and internal stresses that determine the mechanical response. This paper proposes a micromechanical model of a dislocation cell structure that accounts for the material inhomogeneity and incorporates the internal stresses in a physically-based manner. A composite model is employed to describe the material with its dislocation cell structure. The internal stress is obtained as a natural result of plastic deformation incompatibility and incorporated in the composite model. Applications of this model enable the prediction of the mechanical behaviour of metals under various nonuniform deformations. The implementation of the model is relatively straightforward, allowing easy use in macroscopic engineering computations.