A new statistical fuel failure model is developed to take into account the effects of damaging environmental conditions and the overall operating history of the fuel elements. The degradation of material properties and damage resistance of the fuel cladding is mainly caused by the combined effects of accumulated dynamic stresses, neutron irradiation, and chemical and stress corrosion at operating temperature. Since the degradation of material properties due to these effects can be considered as a stochastic process, a dynamic reliability function is derived based on the Markov process. Four damage parameters, namely, dynamic stresses, magnitude of power increase from the preceding power level and with ramp rate, and fatigue cycles, are used to build this model. The dynamic reliability function and damage parameters are used to obtain effective damage parameters. The entropy maximization principle is used to generate a probability density function of the effective damage parameters. The entropy minimization principle is applied to determine weighting factors for amalgamation of the failure probabilities due to the respective failure modes. In this way, the effects of operating history, damaging environmental conditions, and damage sequence are more fully taken into account.