The stress-strain behavior and its effects on the crack initiation and growth of ITO film on PET substrate with a sheet resistance of 45 ohms/sq were investigated. Electrical resistance increased gradually at the strain of 0.7% in the elastic to plastic transition region of the stress strain curves. Numerous cracks were observed after 1% strain and the increase of the resistance can be linked to the cracking of ITO thin films. The onset strain for the increase of resistance increased with increasing strain rate, suggesting the crack initiation is dependent on the strain rate. Upon loading, the initial cracks perpendicular to the tensile axis were observed and propagated the whole sample width with increasing strain. The spacing between horizontal cracks is thought to be determined by the fracture strength and the interfacial strength between ITO and PET. The crack density increased with increasing strain. The spacing between horizontal cracks (perpendicular to the stress axis) increased with decreasing strain rate, The increase of crack density with decreasing strain rate can be attributed to the higher fraction of the plastic strain to the total strain at a given total strain. As the strain increased over 5% strain, cracks parallel to the stress axis were developed and increased in number with strain, accompanied by drastic increases of resistance.