Coiled tubing (CT) is manufactured using plastic processing and weld molding techniques, rendering the weld zone (WZ) susceptible to fatigue fractures under the continuous action of complex alternating loads during field applications. While this risk has garnered significant attention, the underlying mechanisms of its fatigue failure remain elusive. To address this knowledge gap, this study employs an in-situ SEM fatigue test method, coupled with metallographic analysis, hardness testing, SEM observation, and EBSD characterization, to deeply analyze the fatigue microdamage mechanism in the WZ by comparing the fatigue performance of the base material (BM) of the CT with that of WZ. It is found that the microstructure of the BM consists of different scales and shapes of ferrite and a small amount of pearlite nested and intertwined with each other, which has a strong coordinated deformation ability and can effectively relieve stress concentration, delay crack initiation and form a single fatigue source. In contrast, the WZ’s ferrite organization is large, uniform, and independent, making it prone to early-stage plastic deformation with weak inter-grain coordination, resulting in the formation of numerous slip bands and multiple crack sources. During the crack propagation stage, the abundant grain boundaries in the BM effectively deflect the crack expansion direction and slow down its progression; while multiple secondary cracks in the weld expand simultaneously and connect with each other, resulting in a higher crack expansion rate than the BM. The research findings provide crucial insights and guidance for enhancing the overall fatigue performance of CT.