This work investigates a ferrite matrix with multiple non-metallic inclusions to evaluate their influence on the global and local deformation and damage behavior of modified 16MnCrS5 steel. For this purpose, appropriate specimens are prepared and polished. The EBSD technique is used to record local phase and orientation data, then analyze and identify the size and type of inclusions present in the material. The EBSD data are then used to run full phase crystal plasticity simulations using DAMASK-calibrated material model parameters. The qualitative and quantitative analysis of these full phase simulations provides a detailed insight into how the distribution of non-metallic inclusions within the ferrite matrix affects the local stress, strain, and damage behavior. In situ tensile tests are carried out on specially prepared miniature dog-bone-shaped notched specimens in ZEISS Gemini 450 scanning electron microscope with a Kammrath and Weiss tensile test stage. By adopting an optimized scheme, tensile tests are carried out, and local images around one large and several small MnS inclusions are taken at incremental strain values. These images are then processed using VEDDAC, a digital image correlation-based microstrain measurement tool. The damage initiation around several inclusions is recorded during the in situ tensile tests, and damage initiation, propagation, and strain localization are analyzed. The experimental results validate the simulation outcomes, providing deeper insight into the experimentally observed trends.