7xxx aluminium series reach exceptional strength compared to other industrial aluminium alloys. However, 7xxx aluminium series usually exhibit Precipitate-Free Zones (PFZs) along grain boundaries, which favour intergranular fracture and low ductility. In this study, the competition between intergranular and transgranular fracture is experimentally investigated in the 7075 Al alloy. This is of critical importance since it directly affects the formability and crashworthiness of thin Al sheets. Using Friction Stir Processing (FSP), microstructures with similar hardening precipitates and PFZs, but with very different grain structures and intermetallic (IM) particle size distribution, were generated and studied. Experimental results showed that the effect of microstructure on the failure mode was significantly different for tensile ductility compared to bending formability. While the tensile ductility was significantly improved for the microstructure with equiaxed grains and smaller IM particles (compared to elongated grains and larger particles), the opposite trend was observed in terms of formability.