Results of three related projects undertaken to elucidate the mechanism of Zircaloy cladding fracture caused by pellet-cladding interaction (PCI) in water reactor fuel rods are described. A detailed microscopic examination of incipient i.d. cladding defects in some Maine Yankee Core I fuel rods determined that these defects and clad penetrations in related rods were caused by a PCI mechanism that was promoted by chemical species, i.e., stress corrosion cracking (SCC). A consideration of the internal fuel rod chemistry and fission product distribution indicates that one potential agent for SCC of Zircaloy cladding is iodine released from Csl deposited on the i.d. surface and another is cadmium metal. A simple analytical model of crack propagation in Zircaloy cladding based on linear elastic fracture mechanics indicates two possible rate-controlling events, depending on the value of the stress intensification KISCC. If KISCC for irradiated Zircaloy is very low, i.e., on the order of 2.2 to 3.3 MN/m3/2 (2 to 3 ksi ), crack growth is relatively easy, and hence the rate-limiting step must be the nucleation of sharp cracks in the cladding i.d. surface. However, if KISCC for irradiated Zircaloy is relatively large, i.e., ≥11 MN/m3/2 (10 ksi ), a high interfacial friction coefficient, for example, caused by fuel-clad bonding, would be required to propagate the i.d. defect.