Compacted graphite iron (CGI) is a double-phase material, in which complex graphite morphology greatly influences crack initiation and propagation. Despite its wide use and considerable past research on the fracture behaviour of CGI, the understanding of the interaction of propagating cracks with CGI's microstructure is still limited. In this study, a novel method is employed that integrates scanning electron microscopy (SEM) and an optical high-speed camera. This approach allows the clear visualisation of microstructures before and after fracture, as well as the calculation of crack-propagation rate during tensile tests. It is also revealed for the first time that in the case of graphite particles situated at a specific distance from the primary crack path, the initiation of secondary micro-cracks, near particles does not occur. A critical distance from the main crack path for crack initiation is analysed. Further, finite-element simulations are developed to study the effect of microstructure on the fracture behaviour of the tested microstructures. A Johnson-Cook (JC) damage model is calibrated and used in all simulations. The crack path and velocity of simulation results are in good agreement with the experimental data, demonstrating that the JC damage model can be used to predict the crack initiation and propagation of CGI. It is found that interface debonding and crack initiation always tend to appear near the tip of vermicular graphite. Thus, large vermicular graphite particles can affect negatively the toughness of CGI. Graphite particles situated farther from the primary crack significantly reduce the likelihood of crack initiation in that specific location. Furthermore, large nodular graphite particles absorb energy and generate secondary cracks, while small graphite particles have little effect on the crack-path direction. The newly discovered fracture mechanisms and simulation results provide new insights for the design and manufacture of metal-matrix composites (e.g., Al/SiC) with optimal mechanical properties.