In situ observation of AZ61 Mg alloy with 1 and 5 wt% of Al2O3 in the scanning electron microscopy was performed to study influence of the weight fraction of Al2O3 particles on the deformation and fracture mechanism during tensile test. Structure of the experimental materials was also analysed; microstructures were heterogeneous, with randomly distributed globular Al2O3 particles (average diameter of 25 nm) and Mg17Al12 intermetallic phase (average diameter of 0.4 µm). It was shown that during tensile deformation the failure of Mg17Al12 particles and decohesion of the matrix-Al2O3 particles interphase boundary started simultaneously. Decohesion resulted from the different physical properties of matrix and Al2O3 particles. The influence of the Al2O3 weight fraction on the final fracture was evident; for material with 5 wt% of Al2O3, the fracture surface was approximately perpendicular to the loading direction and for material with 1 wt% of Al2O3 was at 45• angle. Fracture surface had transcrystalline ductile character.