Pinhole defects were found in a main combustion chamber made from NARloy-Z after an unexpectedly short time in service. Analysis indicated that the throat section of the liner had been exposed to very severe environmental conditions of high temperature and high oxygen content, which caused ductility loss and grain-boundary separation. The excessive oxygen content in the liner was attributed to diffusion from an oxygen-rich environment that had resulted from nonuniform mixing of propellants. The internal oxygen embrittled the alloy and reduced its thermal conductivity, which resulted in a higher hot-gas wall temperature and associated degradation of mechanical properties.