The micro-mechanical behavior of inclusions in X80 pipeline steel under fatigue loading was investigated by means of SEM in situ observation. The influence of sizes and shapes of inclusion on crack initiation and propagation was analyzed. The result shows that for large-size single-particle inclusion, cracks initiate from the interior under the fatigue loading. When a certain circulation cycles are reached, cracks initiate at the matrix near the sharp corner of the inclusion. The cracks extend at the matrix during the stable extension period and unstable extension period following the crack initiation, until fracture occurred. For chain inclusion, cracks first initiate at the interface between inclusion and matrix within the chain area, and the circulation cycles needed for initiation are far less than single inclusion. Cracks steadily extend after the initiation, and then fracture after very short circulation cycles. A chain of inclusion with the shape corners is serious harmful to the fatigue properties.