In this paper, the mixed boundary integral equation method is developed to study the elastic interactions of a fatigue crack and a micro-defect such as a void, a rigid inclusion or a transformation inclusion. The method of pseudo-tractions is employed to study the effect of a transformation inclusion. An enriched element which incorporates the mixed-mode stress intensity factors is applied to characterize the singularity at a moving crack tip. In order to evaluate the accuracy of the numerical procedure, the analysis of a crack emanating from a circular hole in a finite plate is performed and the results are compared with the available numerical solution. The effects of various micro-defects on the crack path and fatigue life are investigated. The results agree with the experimental observations.