Microstructural fatigue initiation in Al-Sn-Si-Cu-Ni bearing lining alloys is reported and investigated. The secondary phases of such alloys comprise fine and relatively few Sn and Si particles as well as a large number of hard AlNi3-type intermetallics, frequently encapsulated within soft Sn layers. During fatigue tests, these particles were observed to initiate short fatigue cracks. Through elasto-plastic finite element analysis of ideal microstructures but with realistic geometric and mechanical property data, critical values of key stress and strain components within the matrix, the Sn layers, and the particles were predicted and linked to microstructural features associated with observed fatigue initiation. These modelling results indicate the extent to which either the hydrostatic stresses or plastic shear strains may be responsible for fatigue crack initiation in the Sn layers, as well as the optimum microstructural characteristics that would minimise tensile stresses, which are responsible for brittle particle fracture.