Factors responsible for the onset of dislocation generation in the fields of localized high stresses have been studied in LOCOS-isolated test structures by means of preferential etching, junction leakage analysis, and computer simulation. A strong correlation between densities of stacking faults and dislocations was observed in the experiments. Defect distributions also correlated to leakage currents. 2D simulations of stresses, interstitial injection, and stacking fault growth during field oxidation showed that maximum resolved shear stress in the structures did not exceed the critical level for dislocation generation and that the agglomeration of silicon interstitial atoms did not play a notable role in dislocation nucleation. Dislocation and stacking fault formation was attributed to surface mechanical damage introduced during plasma processing.