The aim of this study is to elucidate the fracture mechanism of transformation-induced plasticity (TRIP) steel under reverse loading using a ductile damage simulation method. First, the fracture limit of a TRIP steel under the reverse path is experimentally investigated and compared with the results of a dual-phase (DP) steel without a retained austenite. In both steels, the reduction in fracture strain by compressive pre-strain is smaller than that by tensile pre-strain. The difference between the effects of tensile and compressive pre-strain is even larger in the TRIP steel than in the DP steel. These results are analyzed via numerical calculations using a model that extends the ductile damage theory proposed by Ohata et al. to account for the microstructural changes caused by martensitic transformation. The results indicate that the development of damage in the TRIP steel strongly depends on the fraction and distribution of the hard martensite generated by the transformation. Moreover, when TRIP steels are subjected to compressive pre-strain, martensitic transformation occurs less likely than when they are subjected to tensile pre-strain. This leads to less heterogeneity and less void formation within the microstructure. As a result, the fracture strain decrease in TRIP steel due to compressive pre-strain is smaller than that in DP steel.