Electron microscopy of surface replicas has been employed to determine the metallurgical micromechanics of fatigue crack initiation at surface and shallow subsurface inclusions in 4340 steel. The experimental results are considered in terms of current theoretical analyses of elastic stress distributions around hard inclusions imbedded in soft matrices. A model for crack nucleation at surface inclusions is suggested, based upon debonding of the inclusion/matrix interface at the tensile pole of the inclusion, followed by growth of the debond seam toward the inclusion “equator”. Subsequent generation of a matrix crack is associated with the initiation of “point” surface defects some distance from the inclusion/matrix boundary, but in the plane of the inclusion “equator”. Surface slip plays no discernible role in nucleation of surface inclusions, but slip bands are formed at crack sites above sub-surface inclusions. However, the microcracks continue to form through the link-up of point surface defects.