This study presents the failure analysis of the 37.5 MW gas turbine third stage buckets made of Udimet 500 (U‐500) superalloy. The buckets experienced repetitive integral tip shroud fractures assisted by a low temperature (type II) hot corrosion. A detailed analysis of all elements which had an influence on the failure initiation was carried out, namely: the commensurate loss of a load bearing cross‐sectional area of the bucket tip shroud by the conversion of metal to the corrosion product (scale) and related increase in stress; the influence of the tip shroud microstructure, e.g. a presence of equiaxed and columnar grains, their distribution and orientation; evidence of the transgranular fracture initiation and intergranular creep mechanism fracture propagation. Finally, the most probable mechanism for bucket damage, conclusions and recommendations to prevent failures of the buckets are presented.