Crack initiation in zirconium alloys is an important issue for the safety of water-cooled fission reactors. Zirconium hydrides that precipitate in service are potential crack nucleation sites. In this work, the deformation and cracking of zirconium hydrides was studied during room temperature deformation of a Zircaloy-4 tensile sample up to fracture. The sample contained a hydrogen concentration of 100 ± 20 ppm. The main aims of this study were to better understand the mechanisms behind the hydride fracture in a polycrystalline matrix, and to identify at which point in the deformation of the Zr matrix the first hydrides break. Cracks thus nucleated may coalesce and propagate through the hydrided Zr-alloy. Scanning electron microscopy (SEM) images of a number of hydrides, both intergranular and intragranular, were taken at discrete increments of deformation during an interrupted tensile test. The results show that cracks in hydrides tend to always occur normal to the applied load, signalling the importance of the external stress. However, evidence is also provided to support the hypothesis that internal stresses generated by microstructural constraints may lead to the fracture of some intergranular hydrides.