In vivo and in vitro systems of cells and extra-cellular matrix (ECM) systems are well known to form ordered patterns of orientationally aligned fibers. Here, we interpret them as active analogs of the (disordered) isotropic to the (ordered) nematic phase transition seen in passive liquid crystalline elastomers. A minimal theoretical framework that couples cellular activity (embodied as mechanical stress) and the finite deformation elasticity of liquid crystal elastomers sets the stage to explain these patterns. Linear stability analysis of the governing equations about simple homogeneous isotropic base states shows how the onset of periodic morphologies depends on the activity, elasticity, and applied strain, provides an expression for the wavelength of the instability, and is qualitatively consistent with observations of cell-ECM experiments. Finite element simulations of the nonlinear problem corroborate the results of linear analysis. These results provide quantitative insights into the onset and evolution of nematic order in cell-matrix composites.