The major objective of this work has been to apply a new compatibility-based fracture theory to the investigation of dynamic failure of polycrystalline metals and alloys. To model the nucleation and propagation of failure surfaces at the microstructural scale, under large deformations and dynamic loading conditions, a general fracture criterion based on the integral law of compatibility is used. This new fracture criterion, was coupled with rate-dependent dislocationdensity based crystalline plasticity formulations to elucidate the microstructural mechanisms related to the evolution of intergranular and transgranular failure and to understand how grain sizes and strain-rate sensitivity affect aggregate strength, ductility, and dynamic damage tolerance. It is shown that cracks commonly nucleate at triple junctions and at grain boundaries as intergranular cracks, and that slip bands through grains result in transgranular cracks.