The objective of this paper is to propose a fiber-level modeling method for simulating tensile fracture of 3D needled composite. The complex fiber structure of 3D needled nonwoven preform is reproduced using virtual fibers. Micro-scale model of the composite is established by embedding virtual fiber structure into the voxel meshes of matrix material. The novel stiffness correction method is developed to solve the problems of volume redundancy and loss of reinforcing effect in transverse and shearing directions of the virtual fiber embedded element. The stiffness of the virtual fiber is not changed by the stiffness correction, ensuring that the stress of the virtual fibers is accurate. Damage initiation and evolution for fiber and matrix materials are characterized by the development of damage constitutive models. The tensile behavior of 3D needled composite is simulated. Influence of modeling parameters, including virtual fiber diameter and voxel mesh density on calculation accuracy is analyzed. Experimental tests are conducted to verify the simulation results. It is indicated that the predicted stress–strain response, strength, and fracture mode all agree well with the experimental results.