Bones tissues are heterogeneous materials that consist of various microstructural features at different length scales. The fracture process in cortical bone is affected significantly by the microstructural constituents and their heterogeneous distribution. Understanding mechanics of bone fracture is necessary for reduction and prevention of risks related to bone fracture. The aim of this study is to develop a finite-element approach to evaluate the fracture process in cortical bone at micro-scale. In this study, three microstructural models with various random distributions based on statistical realizations were constructed using the global model’s framework together with a submodelling technique to investigate the effect of microstructural features on macroscopic fracture toughness and microscopic crack-propagation behaviour. Analysis of processes of crack initiation and propagation utilized the extended finite-element method using energy-based cohesive-segment scheme. The obtained results were compared with our experimental data and observations and demonstrated good agreement. Additionally, the microstructured cortical bone models adequately captured various damage and toughening mechanisms observed in experiments. The studies of crack length and fracture propagation elucidated the effect of microstructural constituents and their mechanical properties on the microscopic fracture propagation process.