The transformation-induced plasticity (TRIP) effect considerably enhances the material properties of TRIP-assisted duplex steel due to the martensitic transformation. However, as martensitic transformation progresses, a complex microstructure forms from the intermixing of three phases (i.e., austenite, ferrite, and martensite) in the steel, which results in complex damage behavior, crack nucleation, and propagation characteristics. In this study, under engineering strain up to 55%, TRIP-assisted duplex stainless steel Fe-19.6Cr-2Ni-2.9Mn-1.6Si was characterized to investigate microcrack characteristics. Herein, different types of microcracks were statistically categorized using SEM. Additionally, microcrack nucleation and propagation laws were analyzed in light of microscopic features characterized by EBSD, including phase distribution and grain and phase boundaries. The results show that the majority of microcracks are situated at the phase boundary between original austenite and ferrite, constituting about 70% of all microcracks. The number of microcracks located at the ferrite grain boundary accounts for about 20% of the total, while the number of microcracks located at the original austenite grain boundary accounts for only about 10% of the total. The interface between martensite and ferrite emerged as the primary site for microcrack nucleation. Furthermore, the study identifies three distinct microcrack nucleation sites influenced by various boundary types: at the intersection of martensite, ferrite, and austenite phases; at the junction of martensite/ferrite phase boundary and ferrite grain boundary; and at the cross point of martensite/ferrite phase boundary and the original austenite grain boundary. Therefore, microcracks might propagate along the original austenite/ferrite phase boundary or ferrite grain boundary with a smaller angle (< 30°) to the phase boundary. In addition, microcracks are less apt to propagate along the austenite grain boundary.