The course of the fracture processes during the hydrogenation of the Nd16-xDyxFe76B8 alloy (x = 0 to 3) was studied. Positive volume changes of hydrogenated Nd-rich phase cause intergranular cracks between the grains of the Nd2Fe14B matrix phase. Hydrigen easily penetrates through those cracks into the alloy itself and the hydrogenation of the matrix phase followed by transgranular fracture starts as well.