Many bones within the axial and appendicular skeleton are subjected to repetitive loading during the course of ordinary daily activities. If this loading is of sufficient magnitude or duration, failure of the bone tissue may result. Until recently the structural analysis of these fractures has been limited to two-dimensional sections. Due to the inherent destructiveness of this method, dynamic assessment of fracture progression has not been possible. An image-guided technique to analyze structural failure has been developed utilizing step-wise micro-compression in combination with time-lapsed micro-computed tomographic imaging. This technique allows, for the first time, direct three-dimensional visualization and quantification of fracture initiation and progression on the microscopic level and relates the global failure properties of trabecular bone to those of the individual trabeculae. The goals of this project were first to design and fabricate a novel micro-mechanical testing system, composed of a micro-compression device and a material testing and data acquisition system;​ and second, to validate the testing system to perform step-wise testing of trabecular bone specimens based on image-guided failure analysis. Due to the rate dependant properties of bone, stress relaxation was a concerning factor with respect to the step-wise testing method. In order to address these concerns, the results of the step-wise testing method were compared to those obtained from a conventional continuous test (considered to be the gold standard for the step-wise compressive mechanical testing) over the same total strain range and testing conditions. This was performed using porous aluminum alloy samples with highly reproducible and homogenous structural properties as well as trabecular bone samples from a single whale vertebra. Five cylinders from aluminum foam and trabecular whale bone each were compressed and imaged in a step-wise fashion from 0% to 20% strain at intervals of 2%, 4%, 8%, 12%, 16% and 20%. Mechanical properties obtained from the continuous and step-wise methods were not significantly different for both aluminum foam and whale bone specimens (p>0.05). Both testing methods yielded very similar stress–strain graphs with almost identical elastic and plastic regions with overlaying standard error bars for both whale bone and aluminum foam specimens. This was further concurred by performing regression analyses between the stress data from both testing methods (r²=0.98 for whale bone and aluminum foam specimens). Animations of fracture initiation and progression revealed that failure always occurred in local bands with the remaining regions of the structure largely unaffected independent of structure type. In conclusion, we found step-wise micro-compression to be a valid approach for image-guided failure assessment (IGFA) with high precision and accuracy as compared to classical continuous testing. We expect findings from upcoming studies of IGFA of human vertebral bone to improve our understanding of the relative importance of densitometric, morphological, and loading factors in the etiology of spontaneous fractures of the spine. Eventually, this improved understanding may lead to more successful approaches to the prevention of age-related fatigue fractures.