This paper investigates the fracture mechanism of woodplastic composites (WPCs) in tension utilizing a direct observation method. Several WPC specimens with various weight fractions (with and without coupling agent) were prepared via injection molding to create complex structures of irregular-shaped wood particles randomly dispersed in a thermoplastic high-density polyethylene matrix. The crack initiation and growth in WPC samples under tension were observed using a portable tensile test setup. It was observed that debonding between the wood particles and matrix was the primary fracture mechanism in WPCs with no compatibilizer. Moreover, the orientation of the wood particle significantly affected the fracture mechanism. On the other hand, the occurrence of wood cracking in the samples made with coupling agents was indicative of the bond strengthening property of these agents. The results indicated that the added compatibilizer affected the fracture mechanism and significantly reduced the ductility. Moreover, the increased amount of wood flour reduced both the ductility and the strength of WPCs. However, it was also observed that the strength reduction can be compensated by adding coupling agent.