In order to study the damage process of NEPE propellant during tensile condition,the micro-structure of NEPE sample was observed by in situ SEM. The results show that the interphase dewetting and crack are first founded around big grains. And the binder is pulled into silk shape. Then the crack in NEPE propellant extends through the big grains and collects into macro-crack. On the other hand,the stress distribution in grain-binder unit was also analyzed by finite element method. The analysis shows that the effective stress in big grain-binder unit is much greater than that of small grain-binder unit. So,the main damage model of NEPE propellant during tensile process is interphase damage between big grain and binder.