Hard brittle particles can have an important influence on cleavage fracture in steels, and can act as cleavage initiators. Considering the strain elastic energy and the dislocation pile-up elastic energy to be released, and surface energy to be produced, during the hard brittle particle cracking, the mechanism of crack formation at hard brittle particles in steels was studied by a thermal dynamic model. It has been demonstrated theoretically that both normal stress and dislocation pile-up at the hard brittle particles are necessary for its cracking. Furthermore, a criterion for hard particle cracking has been derived, by which the critical cracking stress for the hard brittle particle was predicted not only to depend on its size and surface energy, but also to have correlations with the grain size. Their correlations are the same as the relationship between the fracture stress determined experimentally and the grain size in the case of finer grain constituents. It can be indicated that in such a situation the hard brittle particle cracking is responsible for the ultimate cleavage fracture of the material. In the case of coarser grain constituents, the critical cracking stress for the hard brittle particle is smaller than the fracture stress determined experimentally. This indicated that propagating a particle-size crack into the surrounding ferrite matrix is the critical event for the ultimate failure of the material.