An in-house Extended Finite Element code is employed to simulate the effect of cracks within a TBC system with a YSZ top coat and a mullite intermediate layer deposited onto a SiC substrate. Microstructural level analysis consists in decomposition of a micrograph into an image showing the crack structure and then image capturing the distribution of pores and coating materials. This later image is used to generate the adaptive Finite Element (FE) mesh while the first image defines a discontinuous enrichment of the FE approximation of the displacement field. This analysis process is versatile and takes into account the presence of the cracks within the coating so that the fracture behavior can be estimated. Stress intensity factors of selected through-thickness cracks were calculated from a domain form of the interaction integral. The concept of XFEM is also extended to thermal analysis. Again, the FE approximation is enriched in a way similar to the previous case; however the weak form is modified to enforce proper temperature changes across the crack width. The cracks are modeled as thermal insulating layers with resistance determined from the kinetic theory of gases. The effective thermal conductivity of the coating is, thereby, predicted.