This paper proposes a new higher-order shear deformation theory for buckling and free vibration analysis of isotropic and functionally graded (FG) sandwich beams. The present theory accounts a new hyperbolic distribution of transverse shear stress and satisfies the traction free boundary conditions. Equations of motion are derived from Lagrange’s equations. Analytical solutions are presented for the isotropic and FG sandwich beams with various boundary conditions. Numerical results for natural frequencies and critical buckling loads obtained using the present theory are compared with those obtained using the higher and first-order shear deformation beam theories. Effects of the boundary conditions, power-law index, span-to-depth ratio and skin-core-skin thickness ratios on the critical buckling loads and natural frequencies of the FG beams are discussed.