The present study investigates the shock wave propagation and diffraction characteristics in a micro-shock tube with sudden expansion and compares with the well-established classical shock wave diffraction in macro-length scale sudden expansions using computational techniques. The Knudsen number for the present micro-shock tube falls in the slip regime and therefore the fluid flow is simulated using the continuum-based Navier–Stokes equation with Maxwell’s slip jump boundary condition. It is found that the shock wave attenuates rapidly in micro-shock tube compared to the shock wave propagation in macro-shock tube. The shock wave diffraction in micro-steps shows similar characteristics compared to macro-steps, such as reflection of the diffracted shock wave from the outer wall and the subsequent transition from regular reflection to Mach reflection, the vortex formation at the step corner, Mach reflection shock structure in the shock-processed gas exiting from the shock tube. However, the secondary shock wave formed due to the interaction of the reflected shock wave with the corner vortex is not seen for the micro-step case compared to the macro-step case. This can be attributed to the reduction in shock strength produced by the thick boundary layer in micro-shock tubes. Different step sizes have been compared for the micro-shock tube with sudden expansion ranging from the step size 1.5 to 3. Also, a detailed comparison has been done between micro- and macro-shock tube with sudden expansion. It is also found that the use of slip velocity increases the shock wave propagation speed compared to the no-slip boundary condition.