To investigate off-axis cracks in composite laminates and their effect on stiffness and hysteretic energy dissipation, fatigue tests were instrumented with automated crack detection to test damage onset and progression. It was found that the onset of stiffness loss correlates well with the onset of matrix cracks, but not with the dissipated energy. To study the transition between experimentally observed damage modes occurring at the micro-scale, the experimentally obtained dissipated energy was compared with Carraro’s model, which predicts this transition based on local stresses. The results show a correlation between the absolute level of dissipated energy and the micro-damage modes.