The in-plane compressive characteristics of the ultra-high molecular weight polyethylene (UHMWPE) fibre (Dyneema?) reinforced composites, both in 0/90° and ±45° fibre orientations with respect to the loading direction, have been investigated. The composite made from unidirectional high modulus fibres (volume fraction 83%) and low strength polyurethane matrix (volume fraction 17%) is layered in an orthogonally alternating manner. The different failure mechanisms for the composites with 0/90° and ±45° fibre orientations have been detected with the methods of experimental measurement, SEM observation and theoretical analysis. The composites specimens of 0/90° fibre orientation failed with macro-buckling of the high-modulus UHMWEP fibre layers with the matrix damage, whereas the specimens of ±45° fibre orientation failed with the shearing of the soft matrix. Hence, the composite specimens in 0/90° fibre orientation had higher stiffness as well as compressive strength than those in ±45° fibre orientation. The failure criteria of the composites under in-plane compression was employed to characterize the failure mechanism. Compared with the traditional thermoset matrix, the soft thermoplastic matrix leads to lower strength and higher failure strain of fibre reinforced composites under in-plane compression. In addition, the composite specimens cut by waterjet machine exhibited higher stress levels than those cut by bandsaw that introduced more initial imperfections with the temperature rising and tensile shocking. The comparison between the methodologies for cutting the tough composites can provide a valuable suggestion to obtain required composite structures without reducing the mechanical properties.