An elastic‐plastic finite element method numerical model previously developed (see Part I of this article) for predicting thermal residual stresses at graded ceramic‐metal interfaces has been applied to determine interface conditions favorable for achieving residual stress reductions. Using Al2O3‐Ni as a model system, and for a fixed specimen geometry, a study was performed to investigate the effects of different interlayer thicknesses and nonlinear composition profiles on strain and stress distributions established during cooling from an assumed elevated bonding temperature. For each interface condition, relative stress reductions were evaluated by comparing the magnitude of specific stress and strain components important for controlling interface failure with those predicted for a sharp (nongraded) interface. For the geometry considered, stress was reduced by thick graded interlayers and nonlinear composition profiles that distributed the largest property changes over the interlayer region having low elastic modulus and high plasticity. In contrast to the Part I results for a linear composition profile, the optimized interlayer condition effectively reduced the peak near‐surface axial stress component.