Particle dispersion ferritic steels with hard VC carbide particles and that with soft Cu particles were tensile-tested for investigating the effect of particle nature (hard or soft) on plastic deformation and ductile fracture behaviors. The Cu dispersion steel exhibited a significantly larger necking deformation than the VC dispersion steel, which is due to less frequent void formation in the Cu dispersion steel. Digital image correlation (DIC) analysis for tensile-deformed specimens revealed that the plastic strain was concentrated around the VC particles in the VC steel, while that was distributed within ferrite matrix away from Cu particles in the Cu steel. As a result of high-magnification observation for the void formation in each steel, it was found that nano-sized voids were nucleated at the interface of the rigid VC particles, while they were never formed at the plastically-elongated Cu particles. Reduced stress/strain concentration at the particle interface is inferred to be occurred by the plastic deformation of soft Cu particles during the tensile deformation. This leads to the retardation of ductile fracture to the higher stress/strain regime and the superior local ductility in the Cu steel.