The problem of liquid metal embrittlement (LME) is one of the main concerns to be addressed when developing high-strength automotive steels. Although LME has been extensively investigated over the past decade, the role of LME-induced cracking on the failure mechanism of steel substrates has not been adequately explored. This study investigates the influence of LME cracking on the tensile properties and failure mechanism of an austenitic microstructure. An in-depth analysis of the LME crack propagation path revealed that the crack propagated predominantly along highangle, random grain boundaries. The detailed failure analysis showed that the Zn-coated austenitic steel failed in an intergranular mechanism without any plastic strain being applied to the grains during deformation. The results of the study indicate that stress-assisted grain boundary diffusion is responsible for the premature failure of Zn-coated austenitic microstructures at much lower tensile stresses than that of the uncoated specimen. It was found that the application of thermomechanical conditions characterized by low stress and low temperature, combined with microstructures featuring a low Zn grain boundary diffusion rate, can effectively reduce LME cracking.