The effect of surface condition on the initiation of iodine-induced stress corrosion cracks in Zircaloy tubing was investigated. The internal surface of the Zircaloy tubing was given one of three surface treatments, namely etching, grit blasting, or shot blasting. Each of these treatments can readily be performed commercially on Zircaloy fuel cladding. Specimens of surface-treated tubing were locally stressed in an iodine environment at 590 K by indenting the outer surface of the tube wall with a small steel ball. The crack initiation pattern on the inner surface was examined in a scanning electron microscope. Crack initiation was found to be least developed for etched surfaces, was most developed for shot-blasted surfaces, and was developed to an intermediate degree for grit-blasted surfaces. Apparent anomalies between these crack initiation data and the time to failure data obtained previously in tube pressurization tests are rationalized on the basis of the cracking processes.