This paper aims to simulate surface cracking and interfacial delamination in ceramic coatings due to their application in different industries. For this purpose, one of the most widely used ceramics, yttrium-stabilized zirconia, which is used as a thermal insulator for superalloy substrate is considered as a case study. Discrete element method was used, due to its great ability to capture the damages at the microscale, to investigate the effect of crack spacing and coating thickness on crack initiation and propagation. Discrete element method solver code is provided by the authors. To investigate damages, a unit cell of the structure between two successive surface cracks was considered. The length of the unit cell represents the crack density in the structure. In addition, for each unit cell length, three coating thicknesses were considered. The results of the current study were compared and validated with those experiments and numerical simulation results presented in the open literature. Good agreement was found. Finally, the effect of interface roughness on stress distribution and damage initiation was examined.