Prediction of ductile failure under dynamic loading conditions, such as projectile penetration and machining operations, is important for safety assessment in the aerospace and automotive structures and the design of manufacturing processes. The empirical Johnson-Cook (JC) model [1] is widely used in numerical simulations, although determination of a unique set of model parameters for a given material from lab-scale experiments proves to be challenging, due to the number of parameters involved. In this study, we propose a novel micromechanics-based criterion for the onset of ductile failure by micro-void coalescence under dynamic loading conditions, in a strain rate and temperature dependent material. The criterion for crack initiation is based on the onset of plastic instability in a porous material, using a constitutive model that accounts for inhomogeneous modes of yielding of a microscale porous unit cell, such as internal necking and shear localization in the inter-void ligaments. The resulting criterion reduces to existing results in the literature for the loading path dependence of ductile failure under quasi-static loading conditions, and the formation of adiabatic shear bands under dynamic loading conditions. The predictive capabilities of the instability-based fracture model are validated by comparison with experimental data from the literature for low-velocity punch tests done on a dual-phase isotropic sheet steel [2]. A comparison of the experimental and predicted responses of the specimens, and a detailed analysis of the qualitative fracture features, are presented; and compared with similar predictions obtained using the JC model. It is shown that the instability-based model yields accurate predictions with fewer material constants than the JC model. In particular, the instability-based model only depends on adjustable parameters relating to the plastic constitutive model and void nucleation from second phase particles, which can be calibrated using standard tension tests on smooth and notched bars.