Automated fiber placement (AFP), once limited to aerospace, is gaining acceptance and offers great potential for marine structures. This paper describes the influence of manufacturing defects, gaps, and overlaps, on the out-of-plane properties of carbon/epoxy composites manufactured by AFP. Apparent interlaminar shear strength measured by short beam shear tests was not affected by the presence of defects. However, the defects do affect delamination propagation. Under Mode I (tension) loading a small crack arrest effect is noted, resulting in higher apparent fracture energies, particularly for specimens manufactured using a caul plate. Under Mode II (in-plane shear) loading there is a more significant effect with increased fracture resistance, as stable propagation for specimens with small gaps changes to arrest with unstable propagation for larger gaps