Inclusion is one of the main causes for unqualified wire. However, the forming mechanism of drawing fracture due to inclusions is still unclear. Therefore, it is significant to figure out the forming mechanism of wire drawing fracture with inclusions for designing and manufacturing high‐quality wires. In this paper, a physical model of wire with inclusion is established based on experimental observations. Multipass drawing is simulated by using finite element method (FEM) with the developed numerical damage modeling. Numerical results demonstrate that the damage increases with the development of drawing progress, and the damage caused by high elastic modulus of inclusion is greater than that of low elastic modulus. Pen‐tip shaped fracture of wire with inclusions is mainly caused by the superposition of core and external V‐shaped damage. Furthermore, the core V‐shaped crack will propagate along the external V‐shaped damage area.