Understanding the role that second phase particles play in failure of most conventional metals is difficult because thermo-mechanical processing methods may produce a spatially heterogeneous precipitate morphology. Quantifying how these precipitates affect failure in magnesium is more complex because most magnesium alloys possess a strong texture and are plastically anisotropic. In this work, large-scale dynamic tension simulations are performed to de-convolve the roles that precipitate heterogeneity and plastic anisotropy play in dictating failure. Discrete, micron-sized precipitates are modeled from μCT measurements and treated as void nucleation sites. Plastic anisotropy is represented using an efficient polycrystal plasticity model. Three-dimensional simulations of dynamic tensile failure are performed using the measured precipitate geometries with the polycrystal model, and compared with experimental stress-strain as well as failure surface measurements along different orientations. These simulations are contrasted with simulations that simplify the precipitate geometry as evenly distributed spherical particles or that suppress plastic anisotropy by using an isotropic plasticity model. By comparing the full fidelity simulations with those that employ reduced physics, the relative contribution of precipitate heterogeneity and plastic anisotropy to the failure process are isolated.