<p>This study extended the average strain energy density theory, traditionally applied for notch analysis in isotropic materials, to predict mixed mode I/II fracture in functionally graded materials. The effectiveness of existing experimental criteria designed for orthotropic materials is examined for their capacity to predict crack initiation in graded materials. A toughening mechanism based on fiber bypassing during crack propagation is introduced and investigated through experimental methods. Scanning electron microscopy images are employed to elucidate the role of this mechanism in enhancing the fracture resistance of chopped/short fiber-reinforced composites. The findings reveal that the average strain energy density method demonstrates strong correlation and agreement with experimental–numerical data, affirming its robustness for predicting crack initiation in mixed mode fracture scenarios.</p>