By in situ tension for the N18 zircaloy, which had been charged hydrogen by electrolytic hydrogenation method, the crack initiating and developing inside of hydrides were observed with SEM. The effects of hydrides on the tensile properties and the fracture behaviours were investigated. The results show that, necking in tension occurs, and many dimples exist on matrix fracture surface, which means that ductile fracture happened during in situ tension, and that the N18 zircaloy has ductility. The cracks are naturally initiated from strip hydrides clusters and propagate rapidly inside of hydrides, but are blunted by plastic matrix, and become to holes. There are many secondary cracks between matrix and brittle hydrides on the fracture surface. Both the shape and distribution of the secondary cracks are similar to those of hydrides. The holes and secondary cracks reduce the ductility of the N18 zircaloy with hydrogen.