In this article, the dynamic fracture behavior of hole-initiated cracks in functionally graded magneto-electro-elastic (FGMEE) bi-materials with exponential variation is studied by Green’s function method, and SH-wave is considered as an external load acting on the bi-materials. The mechanical model of the cracks is constructed through interface-conjunction and crack-deviation techniques, thereby simplifying the crack problem to solving a series of the first kind of Fredholm’s integral equations, from which the dynamic stress intensity factor (DSIF) at the crack tips is expressed. Numerical results clarified the factors that affect the DSIF, including wave number, incident angle, the geometry of the defect, and the gradient of the bi-materials. The accuracy of the present methods is examined by comparing the obtained results with the reference solutions. Compared with previous traditional numerical and analytical methods, the methods proposed in this paper are relatively more effective and applicable, and provide a new perspective for studying the fracture problems of FGMEE materials with more complex defects in practical engineering.