The goal of this paper is to predict how the properties of the constituent phases and microstructure of dual phase steels (consisting of ferrite and martensite) influence their fracture resistance. We focus on two commercial low-carbon dual-phase (DP) steels with different ferrite/martensite phase volume fractions and properties. These steels exhibit similar flow behavior and tensile strength but different ductility. Our experimental observations show that the mechanism of ductile fracture in these two DP steels involves nucleation, growth and coalescence of micron scale voids. We thus employ microstructure-based finite element simulations to analyze the ductile fracture of these dual-phase steels. In the microstructure-based simulations, the individual phases of the DP steels are discretely modeled using elastic-viscoplastic constitutive relations for progressively cavitating solids. The flow behavior of the individual phases in both the steels are determined by homogenizing the microscale calibrated crystal plasticity constitutive relations from a previous study (Chen et al. in Acta Mater 65:133–149, 2014) while the damage parameters are determined by void cell model calculations. We then determine microstructural effects on ductile fracture of these steels by analyzing a series of representative volume elements with varying volume fractions, flow and damage behaviors of the constituent phases. Our simulations predict qualitative features of the ductile fracture process in good agreement with experimental observations for both DP steels. A ‘virtual' DP microstructure, constructed by varying the microstructural parameters in the commercial steels, is predicted to have strength and ductile fracture resistance that is superior to the two commercial DP steels. Our simulations provide guidelines for improving the ductile fracture resistance of DP steels.