The mechanism controlling the cyclic failure of a commercial thermal barrier system has been investigated. The system comprises an electron-beam physical vapor deposited (EB-PVD) yttria-stabilized zirconia thermal barrier coating (TBC), deposited on a (Ni Pt) Al bond coating. The thermally grown oxide (TGO) layer that forms between the TBC and bond coat at high temperature is unstable with respect to out of plane displacement, provided initial perturbations are present. With cyclic thermal exposure, the TGO displaces into the bond coat at periodic interfacial sites. The out-of-plane displacements induce strains above the TGO, normal to the interface, that cause cracking. The cracks nucleate either within the TBC layer or at the TBC/TGO interface, and extend laterally until they coalesce with cracks from other sites and coating failure occurs by large scale buckling. The TGO displacements are accommodated by visco-plastic deformation of the underlying bond coat, and are driven by a lateral component of the growth strain in the TGO. The susceptibility of the TGO to out-of-plane displacement depends critically upon the initial morphology of the metal/oxide interface. The observed material responses are compared with predictions of a ‘ratcheting’ model.