Abstract The mechanical failure of the prosthesis-cement-femur system is analyzed by using a two-dimensional finite element model. The strain energy density (SED) criterion is applied to locate potential failure sites in the PMMA and prosthesis stem for five different prosthesis positions. Medial and lateral failure sites in the proximal regions of the cement are found to be the most sensitive to prosthesis position. According to the SED criterion, these are the weakest regions of the cement. Additional bilateral failure sites are also located at the distal end of the prosthesis, but are less likely to fail. The overall structural integrity of the total hip system is found to be adequate for the ideal case considered herein. In practice, the combination of energy concentration coupled with imperfections such as voids and cracks in the cement are potential sites of failure initiation. On the basis of clinical evidence on cement and prosthesis stem fracture, local reductions in the cement elastic modulus were introduced into the finite element model in order to model cement defects. The bilateral reduction of modulus by 40% in the cement adjacent to the distal portion of the prosthesis stem can lead to an increase of the strain energy density by 19%.