In this paper, the results of laboratory studies of fracture initiation, early propagation and breakdown are reported. Three experiments were conducted on a low permeability sandstone block, loaded in a poly-axial test frame, to representative effective in-situ stress conditions. The blocks were instrumented with Acoustic Emission (AE) and volumetric deformation sensors. In two experiments fluids of different viscosity were injected into the wellbore, fluid injection was interrupted soon after the breakdown pressure had been reached. This allowed us to investigate hydraulic fracture initiation. In the third test fracture initiation criteria were applied to stop hydraulic fracture propagation significantly earlier, prior to breakdown, and as it propagated a short distance from the wellbore. Analysis of AE results shows an increase in AE activity and a change in the AE spatial correlation, during the fracture initiation. This early stage of fracturing correlates strongly with the onset of rock volumetric deformation, and is confirmed by the analysis of ultrasonic transmission monitoring. The rock micro-structure, after the test, was investigated by analysis of SEM images. These indicated the development of leak-off zone near the wellbore and a dry hydraulic fracture at the farther distance from the wellbore.