Catastrophic failure in brittle, porous materials initiates when smaller-scale fractures localize along an emergent failure plane or 'fault' in a transition from stable crack growth to dynamic rupture. Due to the extremely rapid nature of this critical transition, the precise micro-mechanisms involved are poorly understood and difficult to capture. Here, we observe these micro-mechanisms directly by controlling the microcracking rate to slow down the transition in a unique rock deformation experiment that combines acoustic monitoring with contemporaneous in-situ x-ray imaging of the microstructure. The results provide the first integrated picture of how damage and associated micro-seismic events emerge and evolve together during localisation and failure and allow us to ground truth some previous inferences from mechanical and seismic monitoring alone. They also highlight where such inferences miss important kinematically-governed grain-scale mechanisms prior to and during shear failure. Contrary to common assumption, we find seismic amplitude is not correlated with local imaged strain; large local strain often occurs with small acoustic emissions, and vice versa. Local strain is predominantly aseismic, explained in part by grain/crack rotation along an emergent shear zone, and the shear fracture energy calculated from local dilation and shear strain on the fault is half of that inferred from the bulk deformation. This improvement in process-based understanding holds out the prospect of reducing systematic errors in forecasting system-sized catastrophic failure in a variety of applications.