This research focuses on fracture mechanisms in metal–ceramic composites. Two co-continuous composites, Cu/Al2O3 and Al/Al2O3 and a metal–matrix composite Al/SiC were studied. It was found that each composite displayed a different fracture mechanism. The crack propagation inside the metal–matrix composite was dominated by the Al matrix characteristics. However, crack propagation inside both the co-continuous composites was influenced by their microstructure, thermal residual stresses and contiguity. This unique fracture characteristic of co-continuous composites has been elucidated in the present research by experimentation as well as computational modeling. In situ three-point bend tests were performed inside an environmental scanning electron microscope chamber to observe crack growth at the microstructural scale. Finite element modeling was performed by using global–local approach to simulate crack propagation and understand the effects of the microstructure and thermal residual stresses. It was shown that the crack propagated inside the metallic phase and at the interface for the Cu/Al2O3 composite due to a high level of tensile thermal stresses inside the metallic phase, as well as due to low contiguity of ceramic phase. However, in the case of Al/Al2O3 composite, the crack propagated inside the ceramic due to significantly smaller thermal stresses inside the metallic phase as well as higher contiguity of ceramic phase.