Several air heat exchangers failed in service in a pulp and paper operation. The tubes were made from AISI 316 stainless steel with an extruded aluminum fin mechanically bonded to the outside. Originally, the failures were blamed on poor tube to header welds. The units were sent back to the manufacturer for repair. Some of the units failed the hydrostatic test after they were repaired. Microscopic examination revealed the presence of branched transgranular cracks characteristic of stress-corrosion cracking. Only some of the tubes failed and these did so by stress-corrosion cracking. The most probable primary cause of the stress-corrosion cracking was local high residual stresses indicated by the areas of high hardness in the tubes. Low halogens in the water and airborne corrodents found normally in a pulp and paper mill were all that were required in the presence of high residual stresses in the tubes to initiate stress-corrosion cracking. Use of a low-carbon grade of stainless steel such as 316L was recommended to facilitate formation of the tube without producing excessive residual stresses. It was recommended also that failed units be segregated until it can be determined if the failure was related to operating pressure or some other unique cause.