Much of the data on WC-Co cermets show that the fracture toughness,K Ic, increases with increasing tungsten carbide grain size at fixed volume fraction of the cobalt binder phase. It is shown that the origin of this effect can be explained on the basis of the plane stress fracture of constrained cobalt phase and the periodic internal stresses arising due to differential thermal contraction of the two phases. Quantitative models have been derived which take these two effects into account. The effect of macroscopic residual stresses, such as those generated by milling WC-Co drilling inserts, on the apparent toughness has also been analysed. It is shown that for the chevron-notched type specimen the macroscopic residual stress affects not only the maximum load but also the length of the crack at which the maximum occurs. A graphical method is presented which permits the evaluation of the true K‡Ic.