An absolutely conflicting value for the incorporation of the Lode parameter into a fracture criterion was reported in the literature when predicting the ballistic resistance of metallic plates failing through shear plugging. In this study, a combined experimental–numerical investigation was conducted to understand the dynamic shear fracture behavior under compression–shear stress states. Flat-hat-shaped specimens of 30CrMnSiNi2A high-strength steel were loaded using a Split Hopkinson Pressure Bar apparatus, combining the ultra-high-speed photography technique, digital image correlation method, and microstructure observation. Parallel finite element simulations were performed using both a modified Johnson–Cook (MJC) fracture criterion or an extended Xue–Wierzbicki (EXW) fracture criterion with Lode dependence to reveal the value of the Lode parameter incorporation. It was found that deformed shear bands with a width of approximately 0.14 mm form at a critical impact velocity. The EXW criterion correctly predicts the critical fracture velocity and estimates the fracture initiation instants within an error of 5.3%, whereas the MJC fracture criterion overestimates the velocity by 14.3%. Detailed analysis shows that the EXW criterion predicts a combined failure mechanism involving ductile fracture and material instability, while the MJC fracture criterion attributes the failure exclusively to material instability. The improved accuracy achieved by employing the Lode-dependent EXW fracture criterion may be attributed to the compression–shear stress state and the accurate prediction of the failure mechanism of the dynamic shear fracture.