In this paper the microstructure features of melt-textured YBa2Cu3O7-x (123) such as observed phases, grain boundaries, macro- and microcracking and twin structure are characterized. We have revealed subgrains of rectangular shape within 123 grains in the extinction orientation of the ''c''-axis with respect to the vector of polarized light. Segments of boundaries are parallel or perpendicular to the a-b-plane, having maximum occurrence of tilting angle at 6 degrees, they are not wetted by secondary phases and not preferentially cracked. It has been shown that the lines parallel to the a-b-plane are microcracks formed at the tetragonal-orthorhombic (T-O) transition due to the difference in thermal expansion coefficients between 123 and Y2BaCuO5 (211) phases. The microcracking phenomenon obeys the model devised for the multiple failure of a fiber composite under uniaxial tension resulting in a linear relationship between microcrack spacing and 211 particle size or the reciprocal value of 211 volume fraction. A residual tensile stress of 290 MPa in the ''c''-direction was estimated on the basis of the 123 fracture toughness. Oxygenation of the melt-textured samples was shown to be a combination of oxygen volume diffusion, microcracking and penetration of oxygen through the cracks. A new secondary phase having a composition close to Ba2Cu5Ox has been found. A lower 211 interparticle distance generally leads to lowering of twin spacing.