The present study aims at investigating the correlation of microstructure and fracture properties of two AZ91 Mg matrix composites fabricated by squeeze casting technique with a variation of the applied pressure. The composites were reinforced with Kaowool alumino-silicate short fibers and Saffil alumina short fibers. respectively. Microstructural observation. fractographic observation. and in situ fracture tests were conducted on these composites to identify the microfracture process. From the in situ fracture observation of the Kaowool reinforced composites. microcracks were initiated at the short fiber/matrix interfaces for the composite processed with the lower applied pressure. whereas microcracks were initiated easily at short fibers already cracked during squeeze casting at the very low stress intensity level for the composite processed with the higher applied pressure. Thus in this case. the effect of the applied pressure on mechanical properties could be explained using a competing mechanism; the detrimental effect of fiber breakage might override the beneficial effect of the grain refinement and the densification as the applied pressure was increased. On the other hand, for the composites reinforced with Saffil short fibers. microcracks were initiated mainly at the fiber/matrix interfaces at the considerably high stress intensity factor level. while the degradation of fibers was hardly observed even in the case of the highest applied pressure. This finding indicated that the higher applied pressure yielded the better mechanical properties on the basis of the reinforcing effect of Saffil short fibers having excellent resistance to cracking.