Tensile tests are performed on short glass fiber reinforced nylon-6 composite specimens with an open hole. The specimens with four different fiber surface treatments are used. Fiber weight fractions are 10% and 30%. It is found that the dependence of tensile strength on the diameter of hole is different for different fiber weight fractions. To explain the difference in tensile strength, in-situ observation of microscopic failure process around an open hole is conducted. The microgrids are printed on the specimen surface to observe the microscopic deformation and fracture clearly. The difference in microscopic failure process due to the difference in fiber surface treatment and fiber weight fraction an observed, which explains the difference in tensile strength qualitatively. In addition, micro-grid methods are applied to measure the axial strain distribution in a short fiber in a real composite. The sheer-lag prediction is compared with the experimental results. The fiber axial strain distribution obtained by the micro-grid methods is found to agree well with the shear-lag prediction until extensive interfacial debonding occurs.