Transverse crack propagating towards a cross-ply interface is investigated in this study. The non-uniform fiber distribution near ply interface is modelled explicitly in order to study the effect of microstructure on crack path and initiation of delamination. The growth of fiber/matrix interfacial debond and debond kinking out of interface are analyzed based on a combination of energy and stress-based approach, which is convenient in predicting matrix crack path. Kinking of transverse crack tip when it approaches ply interface is investigated using an energy-based approach. It is found that predicted matrix crack path and crack tip kinking behavior near interface is strongly influenced by the local microstructure. The obtained results indicate that an induced symmetrical delamination, i.e., interface cracks of equal length on either side of the transverse ply crack, as often assumed in modeling studies, is not always a favorable damage mode.