In this study, the relation of crack initiation and propagation to microstructure was shown in an AISI M2 high-speed steel using Vickers hardness indentation. Observations were carried out on the cracks generated from the corners of the square pyramid indentation in both the as-quenched, the quenched and tempered specimens. It is shown that cracks are nucleated from the corners of the indentation by either cleavage of the carbide or by decohesion between the carbide and the matrix, depending on the size of the carbide. A nucleated crack propagates by tearing of the martensitic matrix between the cracked carbides ahead of the indentation corner. It is shown that the crack resistance of the M2 steel is determined by the toughness of the matrix rather than the size and distribution of the carbides in the matrix.