A finite element (FE) analysis incorporating particles and grain structure is used to study the localization behavior of direct chill cast (DC) and strip cast (CC) AA5754 alloy sheet. A two-dimensional (2D) plane stress FE model is used to simulate deformation of a sample under uniaxial tension prior to necking. A 2D plane strain model is then used to simulate the post-necking behavior, up to fracture. The plane stress model shows that the strain required for the initiation of necking is similar in both materials, determined predominately by grain-level inhomogeneity, with constituent particles altering the localization path and localization strains, but only weakly. The plane strain model shows more through-thickness thinning during post-necking deformation of DC sheets compared with CC sheets. The CC material is also prone to shear-type failure, while the DC material exhibits a cup–cone-type failure. These differences arise from the microstructural difference between the two samples, where CC sheets contain more intermetallic particles in stringers compared with the DC sheets. This two-stage model is validated by experimental data which show similar limit strains in the DC and CC sheets but quite different fracture strains and fracture surface geometries.