When a lithium ion polymer battery (LiPB) is being cycled, one major cause for degradations is the irreversible side reactions between ions and solvent of electrolyte taking place at the surface of anode particles. SEM analysis of cycled battery cells has revealed that the deposits from the side reactions are dispersed not only on particles, but also between the composite anode and the separator. Thus, the solid electrolyte interface (SEI) becomes thicker and extra deposit layers are formed between composite anode and separator. Also, XPS analysis showed that the deposits are composed of Li2CO3, which is ionic conductive and electronic nonconductive. Based on the mechanisms and findings, we identified four degradation parameters, including volume fraction of accessible active anode, SEI resistance, resistance of deposit layer and diffusion coefficient of electrolyte, to describe capacity and power fade caused by the side reactions. These degradation parameters have been incorporated into an electrochemical thermal model that has been previously developed. The terminal voltage and capacity of the integrated model are compared with experimental data obtained for up to 300 cycles. Finally, the resistance of the deposit layer calculated by the model is validated against the thickness of the deposit layer measured by SEM.