The fracture behavior of plasma-facing components (PFCs) under extreme plasma-material interaction conditions is of great concern to ITER and future fusion reactors. This was explored in the current study by exposing pure tungsten (W), W-1%TiC and W-2%Y2O3 composites to a combined steady-state/transient hydrogen plasma up to a base surface temperature of ∼2220 K, and up to 5000 transient pulses for 1000 s using the linear plasma generator Magnum-PSI. The applied heat loads were characterized by combining sheath physics, thermographic information and finite element analyses, with which the thermal stress was evaluated. Combining microstructural investigation and thermo-mechanical numerical analyses, a physical picture of fracture is developed. The transient heat loads drive surface crack initiation, whose depth can be estimated by a simple analytical model for pure tungsten, while the cooling period following the steady-state heat load induces tensile stresses, opening existing surface cracks deeper. The fracture process is mediated by the microstructure whereby the ceramic particles stabilize the microstructure but promote surface crack initiation due to suppressed plasticity at the grain boundaries and the particle-matrix interfaces. The surface cracks relieve the subsequent cycles of transient thermal stress but intensify the steady-state thermal stress, therefore, promoting deep crack propagation. These results help to understand failure mechanisms in PFCs under extreme operation conditions which are valuable for developing advanced PFCs.