Experience with stainless-steel-clad fuel rods irradiated in the Vallecitos Boiling Water Reactor (VBWR) has shown that Type-304 stainless steel is susceptible to stress-assisted intergranular corrosion attack. Failure of over 40 fuel rods clad with this material occurred during irradiation of 950 fuel rods of several different types. The failures occurred at the peak surface heat flux region of the fuel rods and ranged from microscopic penetrations to multiple large cracks that were invariably intergranular. No precipitates could be observed in the austenitic grain boundaries of failed cladding samples using both optical and electron microscopy. A statistical analysis of the failure-rate data indicates that the failure rate for Type-304 stainless-steel cladding which was initially annealed was not different from the failure rate for initially cold-worked cladding. The failure rate of collapsed cladding was significantly higher than for free-standing cladding. The operating stress level of the cladding appears to be a major factor in susceptibility to failure. Evidence of localized plastic deformation of the cladding at UO2 pellet interfaces was obtained and may contribute to the nucleation or propagation of the stress-assisted corrosion attack of the Type-304 stainless-steel cladding.