This paper describes the analysis of the failure of a Zr-2.5Nb pressure tube in a CANDU reactor. The failure sequence was established as: (1) the existence of an undetected manufacturing flaw in the form of a lamination, (2) in-service development of the flaw by oxidation of the lamination, (3) delayed hydride cracking, which extended the flaw through the wall of the tube, resulting in leakage, and (4) rupture of the tube by cold pressurization while the reactor was shut down. The comprehensive failure analysis led to a remedial action plan that permitted the reactor to be returned to full-power operation and ensured a low probability of a similar occurrence for all CANDU reactors.