In this work, finite element simulations of the initiation of a void by debonding around a large, rigid inclusion and its interaction with a notch tip under mixed-mode loading involving Modes I and II are performed. The analyses are carried out under plane strain, small-scale yielding conditions. The background material is represented by the Gurson constitutive model and micro-void nucleation at uniformly distributed small size particles is also taken into account. Two sets of analyses with different critical interfacial strengths for the matrix-inclusion interface are conducted. The failure of the ligament connecting the notch tip with the void (that has grown around the inclusion) by either micro-void coalescence or by shear crack propagation is simulated and the operative failure mechanism is identified for various mode-mixities. The effect of mode-mixity on the deformation of the notch and growth of the void near it are investigated. Finally, the variation of the critical value of the J integral associated with complete failure of the ligament versus mode-mixity is examined. It is found that the strength of the matrix-inclusion interface may be an important factor that influences the above variation.