Ductile fracture of HY-100 steel at high stress triaxialities occurs by a void-sheet mode of failure in which large elongated voids, formed at MnS inclusions, coalesce as a result of a localized deformation instability that develops between neighboring voids. In this study, micro-mechanical modeling using finite element analysis has been employed to examine the deformation localization behavior within void arrays based on experimentally observed inclusion microstructures of HY-100 steel. Treating the elongated voids as through-thickness holes, we utilize image-based multi-hole models, each depicting roughly 125 voids, to identify the significance of the critical features (size, spacing, clustering) of the void microstructure on the deformation localization process and ultimately void-sheet coalescence and failure. The deformation localization is especially sensitive to the presence of a few large voids spaced within roughly 30 hole diameters of each other and oriented on planes 45 β’ Β± 15 β’ to the maximum applied principal stress. The results also show that deformation localization develops more readily at high stress triaxialities. Smaller, "secondary" voids can promote the onset of strain localization between large voids, even if they nucleate after a rather large void nucleation strain. Within microstructures consisting of solely of small voids, high density clusters can cause intense strain localization, but it is confined within the scale of the cluster.