In this paper, micro structure of ferrite (α-Fe) and cementiti (Fe3C) in 20# Steel are obtained through Fe-Fe3C phase graph. Using Material Studio software, α-Fe/Fe3C atomic-scale micro model can be built.Lammps software is used in molecular dynamics simulation of 20#steel model with two typical defects near the main crack. Under the conditions of canonical ensemble(VBT), the effects of micro-cracks and holes on the mechanical properties of the material is studied. The results showed that crack propagation is the result of chemical bonds breakage between atoms and constantly dislocation emission at crack tip. When the crack reaches the surface of α-Fe/Fe3C and stop extension. Crack tip is gradually passivated and constantly launch dislocation towards cementiti (Fe3C). Then the atoms in cementiti (Fe3C) lost its original arrangement features, and leave the local vacancy which is difficult to recover, and more likely to occur crack tip passivation and shear fracture mechanism along slip plane. Research methods and conclusions provided by this paper have important reference value to discover micro deform and failure mechanism of 20#steel. And provide foundation for further study of 20# steel failure mechanism under corrosive conditions.