The objective of this study is to investigate the interaction between a lightning strike and carbon/fiber composites. The first approach is to characterize the damage development in a composite structure subjected to simulated lightning strikes. Several existing studies have acknowledged that the lightning induced damaged can be categorized into two separate domains of damage; a primary domain of damage that occurs at the attachment point, and a secondary domain of damage that is typically formed around the attachment point. Quantitative studies of the causes of the primary damage domain are not satisfactory for explaining the secondary damage domain and thus, these two domains are produced by presumably different mechanisms. There have been many reports and studies focused on the inspection of the primary damaged area. However, the secondary domain of damage has not yet been fully explained and understood. An experimental setup was configured with a recommissioned lightning current simulator to generate artificial lightning strikes consistent with the existing standard for lightning protection testing used in the aerospace industry. Carbon/epoxy composite laminates in various layups and Pultruded Rod Stitched Efficient Unitized Structure (PRSEUS) panels were subjected to high impulse currents of different magnitudes. The lightning induced damage to the protected and non-protected composite laminates and PRSEUS panels were evaluated, and the influence of different variables such as current magnitude, strike location, and laminate layup were studied. An interesting observation was the secondary damage area that expanded laterally beyond the intense damage area. The structure of a composite panel is such that it forces the current to flow along the carbon fibers directions, as opposed to metals where the relatively isotropic conductivity of the metal allows current to distribute radially. It is argued in this work that the secondary domain of damage may be related to the anisotropic electrical conductivity property of the composite panels. A comprehensive theory based on multidimensional electromagnetic field simulation was proposed to reveal the root cause mechanisms of the unique patterns of secondary damage in the carbon composite structural materials tested with simulated lightning current impulses.