A fracture criterion based on energy balance is proposed for elasto-plastic cracking at hydrides in zirconium, assuming a finite length of crack advance. The proposed elasto-plastic energy release rate is applied to the crack initiation at hydrides in smooth and notched surfaces, as well as the subsequent delayed hydride cracking (DHC) considering limited crack-tip plasticity. For a smooth or notched surface of an elastic body, the fracture parameter is related to the stress intensity factor for the initiated crack. For DHC, a unique curve relates the non-dimensionalized elasto-plastic energy release rate with the length of crack extension relative to the plastic zone size. This fracture criterion explains experimental observations concerning DHC in a qualitative manner. Quantitative comparison with experiments is made for fracture toughness and DHC tests on specimens containing certain hydride structures; very good agreement is obtained.