Our research objective was to obtain a fundamental understanding of how ITO thin films layered on flexible polyethylene terephthalate (PET) substrates fail due to tensile, shear, and bending loading conditions. In our approach, we employed a nonlinear finite-element (FE) approach coupled with dislocation-density crystalline and hypoelastic material models and fracture approaches tailored for channel (film) cracking and interfacial delamination. These predictions were validated with mechanical experiments and characterization at different physical scales. Failure to strain and fracture predictions were used to account for interrelated mechanisms, such as channel and interfacial cracking nucleation and propagation along cleavage planes, interfaces, and within layers. Our predictions indicate that interfacial delamination occurred when channel cracks transitioned to interfacial cracks at the ITO/PET interface for tensile loading conditions. Furthermore, the thin film system, when subjected to three-point bending and shear loading conditions was more resistant to failure in comparison to systems subjected to tensile loading conditions.